AG Mortgage Investment Trust Inc.
reported phenomenal third quarter results early last month with triple-digit year-over-year advances in both net income and revenues. A forward P/E multiple of 7.54 and an impressive P/B multiple of 1.05 offer a promising value proposition for this Zacks #1 Rank (Strong Buy) mortgage REIT (real estate investment trust).
Strong Third Quarter
On November 7, AG Mortgage Investment Trust reported third-quarter core earnings of $1.03 per share, surpassing the Zacks Consensus Estimate by 33.8%.
Net interest income of $24.1 million was derived from an investment portfolio of $4.9 billion, which had a weighted average yield of 3.45%. Weighted average cost of funds was 1.04%, resulting in a net interest margin of 2.41% for the quarter. Net book value per share was $23.71 at the end of the quarter.
The company also increased its quarterly dividend by a whopping 92.5% year over year to 77 cents, which affirms an astounding yield of 12.3%.
Rise in Earnings Estimate Revisions
Over the past 30 days, the Zacks Consensus Estimate for 2012 has increased 5.1% to $3.32, while the Zacks Consensus Estimate for 2013 is up 1.8% to $3.41 over the same time.
AG Mortgage Investment Trust seems to be undervalued with a low forward P/E multiple of 7.54 and a P/B multiple of 1.05 (a P/E ratio under 15.0 and a P/B ratio below 3.0 generally indicate value). The year-to-date return of AG Mortgage Investment Trust is noteworthy at 39.3%, compared to an S&P 500 tally of 11.1%.
Moreover, the company has a 1-year return on equity (ROE) of 14.3%, higher than its peer group average of 7.9%. The stock is currently trading above its 50 day and 200 day moving averages of $23.74 and $22.82, respectively.
Based in New York, AG Mortgage Investment Trust manages and invests in a diversified portfolio of residential mortgage assets, and other real estate-related securities and financial assets. The company primarily invests in agency residential mortgage-backed securities (RMBS), where payments are guaranteed by the U.S. government or government-owned entities. At the same time, the company also invests in fixed- and floating-rate non-agency RMBS that do not possess such guaranteed payments.
In addition, AG Mortgage Investment Trust invests in fixed- and floating-rate commercial mortgage-backed securities; residential mortgage loans secured by residential real property; first or second lien loans; mezzanine financing secured by interests in commercial real estate; and bridge loans. The company currently has a market cap of $574.5 million.
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