NLY
Annaly Capital Management, Inc.
$22.86
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 56.0% below fair value
You pay
$22.86
Bear
$42.82
Fair
$52.00
Bull
$61.18
Bear
$42.82
+87.3%
$2.77 FFO × 18x
Fair
$52.00
+127.5%
$2.77 FFO × 22x
Bull
$61.18
+167.6%
$2.77 FFO × 26x
Key Value Driver
FFO/share ($2.77) × default P/FFO multiple
Implied Market Multiple
8.3x
Summary
Our base-case estimate uses P/FFO × Default REIT Multiple. We then blend that result with the average analyst price target of $24.33 from 28 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $52.00 per share.
Warnings
Standard profit figures are misleading for real estate companies — large non-cash accounting charges make profits look artificially low. Dividend yield and funds from operations are better measures.
Dividend yield of 12.5% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $24.33 (from 28 analysts). Our estimate is 152% above the consensus -- consider that gap carefully.
Key Risks
- P/E and EV/EBITDA are structurally wrong for REITs — use P/FFO and NAV
- Interest rate sensitivity: REIT multiples compress when rates rise
- FFO approximation (NI + D&A) may include gains on property sales — verify