ARMOUR Residential REIT, Inc. (ARR): what the price requires
The current priced-in claim for ARMOUR Residential REIT, Inc. (ARR) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-19 · Source: https://boothcheck.com/report/ARR
Headline
| Field | Value |
|---|---|
| Ticker | ARR |
| Company | ARMOUR Residential REIT, Inc. |
| Current price | $16.87/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | financials |
| Price-to-book | 0.90x |
The implied return on book is non-physical at this price-to-book and is suppressed as misleading. The rarity read below is the honest signal.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +1.37σ |
| cohort percentile (of 10 peers) | 40 |
| sustained it ~10 years at this level | 79% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 0.73x | 4 | justifies |
| Earnings | 0.42x | 2 | justifies |
| Relative | 0.24x | 4 | justifies |
| Growth | 0.75x | 2 | justifies |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 4.7%); the inversion above states its own rate.
Per-Model Detail (n=12)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | — |
| DCF Exit Multiple | Growth | $0.00 | — | no | Negative/zero FCF or EBITDA — equity value floored at $0 |
| Relative Valuation | Relative | $58.71 | 0.29x | yes | P/E 24.36x (blended: static sector reference 35x + trailing (TTM) 8x), scenarios: 19.5x / 24.4x / 29.2x (bear / base = reference held flat / bull), EV/EBITDA 20x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $106.11 | 0.16x | yes | Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $21.74 | 0.78x | yes | BV/sh $19.54, ROE (TTM) 10.3%, ke 9.3% |
| Two-Stage Excess Return | Asset | $22.90 | 0.74x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $12.56 | 1.34x | yes | Rev $0.2B, growth 30% (input: historical growth; tapered), Terminal P/S: 8.4x / 10.5x / 12.6x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $87.15 | 0.19x | yes | EPS $2.49, growth 35% (input: historical EPS growth), PEG=0.24 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | $23.11 | 0.73x | yes | BV $19.54 + 5yr PV of (ROE (TTM) 10.3% − Kₑ 9.3%) × BV; BV grows 6.7%/yr |
| Graham Number | Asset | $33.09 | 0.51x | yes | √(22.5 × EPS $2.49 × BVPS $19.54) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | $0.01 | 1687.00x | yes | FCF $134.3M / Kₑ 9.3% — zero-growth perpetuity (excluded from median) |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $80.34 | 0.21x | yes | EPS $2.49 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $9.67 | 1.74x | yes | Revenue $0.19B × sector P/S 6.0x |
| PEG Fair Value | Relative | $93.37 | 0.18x | yes | EPS $2.49 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $26.92 | 0.63x | yes | EPS $2.49 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Share count CAGR (dilution) | 42.7% |
Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).
Bullet Takeaways
- ARMOUR Residential is an agency mortgage REIT: it borrows against a $21.1 billion portfolio that is 92.5% government-backed mortgage securities and pays out the spread, with a monthly dividend of $0.24 a share.
- The dividend was well covered by the cash measure in Q1 2026: distributable earnings of $0.76 a share against a $0.72 quarterly payout, even as the company reported a GAAP loss of $0.49 a share.
- The risk is the book: book value per share fell 6.5% in the quarter to $17.42, and the company funds growth by issuing shares, which only helps holders when it sells above book.
Bull Case
The way ARMOUR allocates capital is the heart of the bull case, because an agency mortgage REIT is essentially a managed spread vehicle and what matters is how disciplined that management is. The portfolio is overwhelmingly safe on credit: 92.5% agency mortgage-backed securities, which carry a government guarantee on the underlying loans, plus 4.7% U.S. Treasuries. The risk is not that the borrowers default; it is interest rates and prepayment. By holding almost entirely guaranteed paper, ARMOUR concentrates the bet on the spread between its borrowing cost and its asset yield, which is the cleanest version of the trade.
The payout is the product, and in the most recent quarter it was covered. Distributable earnings, the cash measure the dividend is paid from, were $90.5 million or $0.76 a share against a $0.72 quarterly dividend, and net interest income was $70.7 million. A monthly dividend of $0.24 a share on a $16.74 price is a high cash yield, and coverage above the payout is the signal that the distribution is funded by the spread rather than by returning capital. For an income-oriented holder, a covered double-digit yield on guaranteed collateral is the entire reason to own the name.
The capital activity shows management leaning into the moment rather than sitting still. ARMOUR raised $215.3 million through at-the-market share issuance during the quarter and made a small repurchase under its authorization. Issuing shares to grow the asset base, when done at or above book value, is accretive: it adds earning assets and spreads the fixed costs of the externally managed structure over a larger base. The bull case is a high, covered yield on a government-guaranteed portfolio, run by a manager actively sizing the book to the opportunity in front of it.
Bear Case
The advantage an agency REIT appears to offer, a safe portfolio paying a fat yield, erodes the moment you watch what happens to the book value, and this quarter it eroded fast. Book value per share fell 6.5%, from $18.63 to $17.42, in a single quarter. That is the number that actually compounds a holder's wealth, and it went backward. The dividend you collect monthly is being paid while the net asset value behind each share shrinks; if that pattern persists, the total return is a high yield offset by a declining book, which can net to very little or worse.
The GAAP result tells the same story the bull case softens. ARMOUR reported a net loss to common stockholders of $58.0 million, or $0.49 a share, in the quarter. The gap between that loss and the positive distributable earnings is the mark-to-market on the portfolio and the hedges: when rates move against the position, the value of the securities and the swaps swings, and the loss is real even if it does not show in the cash measure. The whole business is a leveraged bet on the spread holding and rates behaving, and the filing is explicit that prepayments, the unscheduled return of principal when homeowners refinance, are "less" predictable than the scheduled payments, which is precisely the variable that erodes returns when rates fall.
The share issuance is the second concern hiding inside the capital-allocation story. Raising $215.3 million by issuing nearly 12 million new shares grows the asset base, but it only benefits existing holders if those shares are sold above book value. Issued at or below book, it dilutes the very net asset value that just fell 6.5%. The stock trades near book at roughly 0.9 times, so the margin on accretive issuance is thin. Add it up: a portfolio whose book value is contracting, a GAAP loss, leverage that amplifies every rate move, and a growth mechanism that can quietly dilute. The discount to book is not obviously cheap; it is the market pricing the risk that the book keeps sliding.
Valuation
A financial is worth the return it earns on its capital, so ARMOUR is read off price-to-book, not an operating multiple. At $16.74 against a book value of $17.42 a share, the stock trades near 0.9 times book. The honest statement of the bet here is qualitative rather than a single return figure: the price pays close to the accounting value of the portfolio, and the question is whether the spread the portfolio earns can hold that book value steady while funding the dividend. A precise implied return on equity at this price-to-book would be misleading, so it is better left unstated.
The methods that fit a balance-sheet lender cluster near the price, while the ones built for operating companies produce noise. The asset-based excess-return approaches, which anchor on book value and the spread the portfolio earns, land in the low $20s, somewhat above the current price, consistent with a stock trading at a modest discount to book. The price-to-earnings, dividend-discount, and growth-extrapolation methods generate wildly high figures because they are designed for businesses with growing earnings streams, not for a leveraged spread book; those should be set aside. Read through the right lens, the price is supported by the portfolio's asset value, with the discount reflecting the recent book erosion.
The solvency frame for a mortgage REIT is not net debt and interest coverage, because the borrowing is the business model rather than corporate leverage; it is the durability of the book value and the coverage of the dividend. On those, the quarter was mixed: distributable earnings of $0.76 a share covered the $0.72 dividend, but book value fell 6.5%. The decisive question the valuation poses is whether the spread environment lets ARMOUR stabilize its book while paying out, because a high yield on a shrinking book is not the bargain the headline discount to book makes it look.
Catalysts
The first quarter of 2026 was a coverage-versus-book quarter. ARMOUR reported net interest income of $70.7 million and distributable earnings of $90.5 million, or $0.76 a share, covering the $0.72 quarterly dividend, while posting a GAAP net loss to common stockholders of $58.0 million, or $0.49 a share. Book value per common share fell 6.5% to $17.42 from $18.63 at year-end 2025. The portfolio stood at $21.1 billion, comprised of 92.5% agency mortgage-backed securities, 4.7% Treasuries, and 2.8% to-be-announced securities.
The forward catalysts are rates, spreads, and the dividend guidance that follows them. ARMOUR raised $215.3 million through at-the-market common share issuance and made a small buyback during the quarter. For an agency REIT, the variables that move the next several quarters are the level and direction of interest rates, the spread between agency mortgage yields and funding costs, and prepayment speeds, all of which feed directly into book value and dividend coverage. The single most-watched item is whether book value stabilizes after the quarter's decline; a steadying book alongside a covered dividend is what would justify the holder collecting the yield, while a continued slide turns the high payout into a return of capital.
Peer Cohorts (Per Segment, With Filing Citations)
ARMOUR Residential REIT (single segment) (reported)
- AGNC (AGNC Investment Corp.)
- FY2025 10-K: …has decades of experience investing in Agency RMBS and our other targeted investments. Our asset selection process involves assessing relative risk-return profiles against the backdrop of broader market conditions. Utilizing sophisticated modeling techniques, we identify assets with favorable underlying loan…
- FY2025 10-K: …us-gaap:PerformanceSharesMember agnc:A2016EquityPlanMember 2024-01-01 2024-12-31 0001423689 agnc:A2016EquityPlanMember us-gaap:PerformanceSharesMember 2024-01-01 2024-12-31 0001423689 us-gaap:RestrictedStockUnitsRSUMember agnc:PerformanceadjustmentMember us-gaap:PerformanceSharesMember agnc:A2016EquityPlanMember…
- NLY (Annaly Capital Management, Inc.)
- FY2025 10-K: …primarily on Residential Securities (as defined in the "Securities" Note), residential mortgage loans, commercial investments and reverse repurchase agreements. Interest accrued but not received is recognized as Interest receivable in the Consolidated Statements of Financial Condition. Interest income is presented as…
- FY2025 10-K: …of Prime Jumbo interest-only securities as of December 31, 2025 and December 31, 2024, respectively. F-12 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Financial Statements The following table presents the Company's Agency mortgage-backed securities portfolio by issuing Agency at December 31, 2025 and 2024:…
- DX (DYNEX CAPITAL, INC.)
- FY2025 10-K: …ability to comply with income and asset tests required to qualify as a REIT. In addition, our decision to repurchase shares under the program could adversely affect our competitive position and could negatively impact our ability in the future to invest in assets that have a greater potential return than our share…
- FY2025 10-K: …The Company's investment and hedging portfolios are managed together. The Company's revenue is derived from its investment portfolio, which currently consists of primarily Agency RMBS. The Company's chief operating decision maker ("CODM") is its Co-CEO and President . Segment performance is measured by and resource…
- EFC (Ellington Financial Inc.)
- FY2025 10-K: 99,999 131 4.50%-10.00% 12/46-2/60 n/a n/a n/a 35,774 1,672 Adjustable Rate Residential Mortgage Loan Held in Securitization Trust $500,000-$749,999 44 4.50%-10.00% 1/47- 3/60 n/a n/a n/a 21,804 631 Adjustable Rate Residential Mortgage Loan Held in Securitization Trust $750,000-$999,999 20 4.13%-9.00% 3/48- 7/59 n/a…
- FY2025 10-K: Securitization Trust $2,000,000-$2,249,999 2519 3.25%-14.25% 1/26- 6/62 n/a n/a n/a 963,449 23,748 Fixed Rate Residential Mortgage Loan Held in Securitization Trust $2,250,000-$2,499,999 7 3.63%-10.00% 1/26- 8/61 n/a n/a n/a 15,188 - Fixed Rate Residential Mortgage Loan Held in Securitization Trust…
- RITM (Rithm Capital Corp.)
- FY2025 10-K: RITHM CAPITAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in tables in thousands, except share and per share data) Servicer Advances and Excess MSRs (A) MSRs Government and Government-Backed and Other Securities Residential Mortgage Loans Consumer Loans Real Estate, Net RTLs Asset…
- FY2025 10-K: …with partial funding at closing and additional loan installments disbursed to the borrower upon satisfactory completion of previously agreed stages of construction. Asset Management The Asset Management segment mainly includes our fee-based investment management activities conducted primarily through RAM. RAM…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q1 2026 results, April 2026 · FY2025 10-K