Critical Review: ARMOUR Residential REIT (ARR) & The Competition
ARMOUR Residential REIT (NYSE: ARR) is one of 44 publicly-traded companies in the “Residential REITs” industry, but how does it weigh in compared to its peers? We will compare ARMOUR Residential REIT to similar businesses based on the strength of its institutional ownership, earnings, analyst recommendations, valuation, profitability, dividends and risk.
This table compares ARMOUR Residential REIT and its peers’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|ARMOUR Residential REIT||114.11%||9.26%||1.31%|
|ARMOUR Residential REIT Competitors||18.92%||5.16%||1.99%|
Risk and Volatility
ARMOUR Residential REIT has a beta of 0.77, indicating that its share price is 23% less volatile than the S&P 500. Comparatively, ARMOUR Residential REIT’s peers have a beta of 0.61, indicating that their average share price is 39% less volatile than the S&P 500.
Insider and Institutional Ownership
46.1% of ARMOUR Residential REIT shares are held by institutional investors. Comparatively, 77.3% of shares of all “Residential REITs” companies are held by institutional investors. 1.2% of ARMOUR Residential REIT shares are held by company insiders. Comparatively, 7.1% of shares of all “Residential REITs” companies are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
ARMOUR Residential REIT pays an annual dividend of $2.28 per share and has a dividend yield of 8.6%. ARMOUR Residential REIT pays out 30.0% of its earnings in the form of a dividend. As a group, “Residential REITs” companies pay a dividend yield of 3.4% and pay out 119.7% of their earnings in the form of a dividend. ARMOUR Residential REIT has increased its dividend for 2 consecutive years. ARMOUR Residential REIT is clearly a better dividend stock than its peers, given its higher yield and lower payout ratio.
This is a summary of current ratings and target prices for ARMOUR Residential REIT and its peers, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|ARMOUR Residential REIT||0||1||0||0||2.00|
|ARMOUR Residential REIT Competitors||288||1337||1274||36||2.36|
ARMOUR Residential REIT currently has a consensus price target of $24.00, suggesting a potential downside of 8.95%. As a group, “Residential REITs” companies have a potential upside of 2.56%. Given ARMOUR Residential REIT’s peers stronger consensus rating and higher possible upside, analysts plainly believe ARMOUR Residential REIT has less favorable growth aspects than its peers.
Valuation and Earnings
This table compares ARMOUR Residential REIT and its peers gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||EBITDA||Price/Earnings Ratio|
|ARMOUR Residential REIT||$331.03 million||N/A||3.47|
|ARMOUR Residential REIT Competitors||$702.65 million||$394.70 million||1.03|
ARMOUR Residential REIT’s peers have higher revenue and earnings than ARMOUR Residential REIT. ARMOUR Residential REIT is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.
ARMOUR Residential REIT peers beat ARMOUR Residential REIT on 8 of the 14 factors compared.
About ARMOUR Residential REIT
ARMOUR Residential REIT, Inc. is a real estate investment trust. The Company invests in and manages a leveraged portfolio of mortgage-backed securities (MBS) and mortgage loans. The Company invests in residential mortgage backed securities issued or guaranteed by a United States Government-sponsored enterprise (GSE), such as the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, or a government agency, such as the Government National Mortgage Association (collectively, Agency Securities). The Company also invests in Interest-Only Securities, which are the interest portions of Agency Securities that are separated and sold individually from the principal portion of the same payment. The Company raises funds for additional funding through equity offerings (including preferred equity), unsecured debt securities and convertible securities (including warrants, preferred equity and debt), among others. It is managed by ARMOUR Capital Management LP.
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