RITM
Rithm Capital Corp.
$9.74
Real Estate Investment Trust
85%
P/FFO × Diversified REIT Multiple
Strong
·
Conviction
Undervalued
Trading 64.5% below fair value
You pay
$9.74
Bear
$22.75
Fair
$27.45
Bull
$32.14
Bear
$22.75
+133.6%
$1.41 FFO × 18x
Fair
$27.45
+181.8%
$1.41 FFO × 22x
Bull
$32.14
+230.0%
$1.41 FFO × 26x
Adjust Assumptions
22.1x
$
Key Value Driver
FFO/share ($1.41) × diversified P/FFO multiple
Implied Market Multiple
6.9x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (19 analysts)
$13.00
Divergence from AlphaVal
111%
Summary
At $1.41 FFO/share with a 22x diversified REIT multiple, the base-case value is $27.45 per share. Dividend yield: 10.3%. DDM cross-check: $18.64.
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 10.3% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $18.64 (32% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $13.00 (from 19 analysts). Our estimate is 111% 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