NLY
Annaly Capital Management, Inc.
$21.45
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 58.8% below fair value
You pay
$21.45
Bear
$42.86
Fair
$52.04
Bull
$61.23
Bear
$42.86
+99.8%
$2.77 FFO × 18x
Fair
$52.04
+142.6%
$2.77 FFO × 22x
Bull
$61.23
+185.5%
$2.77 FFO × 26x
Key Value Driver
FFO/share ($2.77) × default P/FFO multiple
Implied Market Multiple
7.7x
Summary
Our base-case estimate uses P/FFO × Default REIT Multiple. We then blend that result with the average analyst price target of $24.50 from 28 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $52.04 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 13.1% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $24.50 (from 28 analysts). Our estimate is 150% 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