Lument Finance Trust, Inc. (NYSE: LFT)

Sector: Real Estate Industry: REIT - Mortgage CIK: 0001547546
Market Cap 71.37 Mn
P/B 0.31
P/E 14.10
P/S 2.98
ROIC (Qtr) 1.27
Div Yield % 24.82
Rev 1y % (Qtr) -46.74
Total Debt (Qtr) 717.43 Mn
Debt/Equity (Qtr) 3.12

About

Lument Finance Trust, Inc. (LFT) is a real estate investment trust (REIT) specializing in commercial real estate (CRE) debt investments. It operates within the expansive financial industry, specifically within the realm of real estate. Lument Investment Management, LLC, a subsidiary of ORIX Corporation USA, manages LFT. Lument Finance Trust's primary business activities revolve around investing in CRE debt instruments. These include transitional floating rate CRE mortgage loans, mezzanine loans, preferred equity, commercial mortgage-backed securities,...

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Price action

Investment thesis

Bull case

  • Operating cash flow of 15.18M provides strong 84.33x coverage of stock compensation 179982, indicating sustainable incentive practices.
  • Robust free cash flow of 14.32M exceeds capital expenditure of 861706 by 16.61x, indicating strong organic growth funding capability.
  • Cash reserves of 56.85M provide ample 33.09x coverage of acquisition spending 1.72M, enabling strategic growth opportunities.
  • Operating cash flow of 15.18M provides strong 23.47x coverage of operating expenses 646715, showing operational efficiency.
  • Strong free cash flow of 14.32M provides 8.33x coverage of acquisition spending 1.72M, indicating disciplined M&A strategy.

Bear case

  • Operating cash flow of 15.18M barely covers its investment activities of 288.08M, with a coverage ratio of 0.05, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 15.18M provides thin coverage of dividend payments of (20.40M) with a -0.74 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 14.32M represents just -0.05x of debt issuance (286.35M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • R&D investment of 0 represents just 0x of SG&A expenses of 10.99M, indicating potential underinvestment in innovation relative to administrative overhead.
  • R&D spending of 0 represents just 0x of capital expenditure 861706, indicating potential underinvestment in innovation relative to physical assets.

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 0.80 0.83
EV to Cash from Ops. EV/CFO 50.61 -102.96
EV to Debt EV to Debt 1.07 1.31
EV to EBIT EV/EBIT 78.31 -260.73
EV to EBITDA EV/EBITDA 60.14 -16.37
EV to Free Cash Flow [EV/FCF] EV/FCF 53.65 3.47
EV to Market Cap EV to Market Cap 10.76 9.18
EV to Revenue EV/Rev 32.11 26.77
Price to Book Value [P/B] P/B 0.31 0.68
Price to Earnings [P/E] P/E 14.10 -4.85
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.20 -0.55
Dividend Payout Ratio % Div Payout % (Qtr) 350.00 29.47
Dividend per Basic Share Div per Share (Qtr) 0.35 1.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 128.21 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) -12.65 24.22
Dividend Growth (1y) % Div 1y % (Qtr) 16.67 4.53
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -57.15 17.83
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -49.45 9.86
EBIT Growth (1y) % EBIT 1y % (Qtr) -57.13 20.98
EBT Growth (1y) % EBT 1y % (Qtr) -57.13 11.17
EPS Growth (1y) % EPS 1y % (Qtr) -72.22 59.25
FCF Growth (1y) % FCF 1y % (Qtr) -52.32 59.63
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -38.14 20.65
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.03 0.04
Cash Payout Ratio Cash Payout (Qtr) 1.81 0.83
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.00
Debt to Equity Ratio Debt/Equity (Qtr) 3.12 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) 43.00 137.11
EBIT Margin % EBIT Margin % (Qtr) 41.00 142.19
EBT Margin % EBT Margin % (Qtr) 41.00 129.16
Gross Margin % Gross Margin % (Qtr) 100.00 117.97
Net Profit Margin % Net Margin % (Qtr) 21.20 125.89