Armour Residential REIT, Inc. (NYSE: ARR)

Sector: Real Estate Industry: REIT - Mortgage CIK: 0001428205
Market Cap 1.84 Bn
P/B 0.87
P/E 35.07
P/S 15.78
ROIC (Qtr) 0.39
Div Yield % 16.28
Rev 1y % (Qtr) 126.05
Total Debt (Qtr) 16.56 Bn
Debt/Equity (Qtr) 7.78

About

Armour Residential REIT, Inc. (ARR) is a real estate investment trust (REIT) operating in the financial industry, with a focus on investing in mortgage-backed securities (MBS) and other real estate-related assets. The company is externally managed by Armour Capital Management LP (ACM), and its stock is listed on the New York Stock Exchange under the ticker symbol ARR. ARR's main business activities revolve around investing in MBS, which are securities that represent an ownership interest in a pool of mortgage loans. The company's investment portfolio...

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Price action

Investment thesis

Bull case

  • Operating cash flow of 179.08M provides strong 80.78x coverage of stock compensation 2.22M, indicating sustainable incentive practices.
  • Strong operating cash flow of 179.08M provides 49.02x coverage of SG&A expenses 3.65M, showing efficient operational cost management.
  • Operating cash flow of 179.08M provides strong 15.62x coverage of operating expenses 11.47M, showing operational efficiency.
  • Strong free cash flow of 179.08M provides 49.02x coverage of SG&A expenses 3.65M, indicating efficient cost management.
  • Free cash flow of 179.08M provides solid 15.62x coverage of operating expenses 11.47M, showing operational efficiency.

Bear case

  • Operating cash flow of 179.08M barely covers its investment activities of (6.66B), with a coverage ratio of -0.03, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 179.08M provides thin coverage of dividend payments of (233.60M) with a -0.77 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 179.08M represents just 0.03x of debt issuance 5.85B, suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of 179.08M shows concerning coverage of minority interest expenses of (3M), which is -59.77x, suggesting complex corporate structure risks.
  • Operating cash flow of 179.08M is outpaced by equity issuance of 992.39M (0.18 ratio), indicating concerning reliance on equity markets for funding operations.

Peer comparison

Companies in the REIT - Mortgage
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NLY Annaly Capital Management Inc 13.57 Bn 10.12 7.94 107.02 Bn
2 AGNC AGNC Investment Corp. 11.33 Bn 16.49 30.46 95.01 Bn
3 STWD Starwood Property Trust, Inc. 6.34 Bn 17.32 3.51 21.43 Bn
4 RITM Rithm Capital Corp. 5.69 Bn 7.32 1.14 34.97 Bn
5 BXMT Blackstone Mortgage Trust, Inc. 3.26 Bn 30.37 6.41 15.46 Bn
6 ARR Armour Residential REIT, Inc. 1.84 Bn 35.07 15.78 16.56 Bn
7 DX Dynex Capital Inc 1.60 Bn 9.10 6.93 11.75 Bn
8 ABR Arbor Realty Trust Inc 1.50 Bn 9.82 2.84 10.40 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.74 0.83
EV to Cash from Ops. EV/CFO 79.46 -102.96
EV to Debt EV to Debt 0.86 1.31
EV to EBIT EV/EBIT 210.70 -260.73
EV to EBITDA EV/EBITDA 220.48 -16.37
EV to Free Cash Flow [EV/FCF] EV/FCF 79.46 3.47
EV to Market Cap EV to Market Cap 7.72 9.18
EV to Revenue EV/Rev 121.84 26.77
Price to Book Value [P/B] P/B 0.87 0.68
Price to Earnings [P/E] P/E 35.07 -4.85
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.21 -0.55
Dividend Payout Ratio % Div Payout % (Qtr) -3,200.00 29.47
Dividend per Basic Share Div per Share (Qtr) 2.64 1.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 153.76 57.60
Interest Coverage Interest Coverage 0.00 -0.17
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex Growth (1y) % 0.00 37.60
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 55.74 24.22
Dividend Growth (1y) % Div 1y % (Qtr) -17.50 4.53
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -49.85 17.83
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -50.99 9.86
EBIT Growth (1y) % EBIT 1y % (Qtr) -49.85 20.98
EBT Growth (1y) % EBT 1y % (Qtr) -49.85 11.17
EPS Growth (1y) % EPS 1y % (Qtr) -103.16 59.25
FCF Growth (1y) % FCF 1y % (Qtr) -22.60 59.63
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -47.70 20.65
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.01 0.04
Cash Payout Ratio Cash Payout (Qtr) 1.42 0.83
Cash Ratio Cash Ratio (Qtr) 0.00 0.00
Current Ratio Curr Ratio (Qtr) 0.00 0.00
Debt to Equity Ratio Debt/Equity (Qtr) 7.78 5.05
Interest Cover Ratio Interest Cover Ratio 0.00 -0.17
Times Interest Earned Times Interest Earned 0.00 -0.17
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 57.80 137.11
EBIT Margin % EBIT Margin % (Qtr) 57.83 142.19
EBT Margin % EBT Margin % (Qtr) 57.83 129.16
Gross Margin % Gross Margin % (Qtr) 68.20 117.97
Net Profit Margin % Net Margin % (Qtr) 45.00 125.89