RITM
Rithm Capital Corp.
$9.26
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 59.9% below fair value
You pay
$9.26
Bear
$19.10
Fair
$23.06
Bull
$27.03
Bear
$19.10
+106.2%
$1.41 FFO × 18x
Fair
$23.06
+149.1%
$1.41 FFO × 22x
Bull
$27.03
+191.9%
$1.41 FFO × 26x
Key Value Driver
FFO/share ($1.41) × default P/FFO multiple
Implied Market Multiple
6.6x
Summary
Our base-case estimate uses P/FFO × Default REIT Multiple. We then blend that result with the average analyst price target of $13.63 from 19 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $23.06 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 10.8% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $14.50 (45% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $13.63 (from 19 analysts). Our estimate is 92% 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