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If you are wondering whether AGNC Investment is attractively priced or getting ahead of itself, you are in the right place for a clear look at what the current share price might mean for value.
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The stock recently closed at US$11.80, with returns of 8.8% over the last 30 days, 8.0% year to date, 39.7% over 1 year, 61.8% over 3 years, and 43.0% over 5 years. Over the last 7 days, the share price declined by 1.1%.
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Recent news on AGNC Investment has focused on how income focused investors view its role in a portfolio and how changes in the rate outlook may affect mortgage REITs more broadly. This context helps explain why the share price has seen both periods of strength and short term pullbacks as investors reassess risk and income potential.
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AGNC Investment currently scores 4 out of 6 on our valuation checks. This suggests there is more to unpack when you compare different valuation methods, and we will also look at a more complete way to judge value toward the end of the article.
The Excess Returns model looks at how efficiently AGNC Investment is expected to use shareholder capital. It compares the return that equity generates with the cost of that equity, then projects how much value can be created over time.
For AGNC Investment, book value is estimated at $8.83 per share, and stable book value is $9.26 per share, based on weighted future book value estimates from 4 analysts. Stable EPS is $1.65 per share, sourced from weighted future return on equity estimates from the same analyst group. The average return on equity is 17.86%.
The model uses a cost of equity of $0.85 per share and an excess return of $0.80 per share to assess how much value AGNC Investment might generate over that cost. Combining these inputs produces an estimated intrinsic value of $22.86 per share.
Compared with the recent share price of $11.80, this Excess Returns estimate implies the stock is 48.4% undervalued.
Result: UNDERVALUED
Our Excess Returns analysis suggests AGNC Investment is undervalued by 48.4%. Track this in your watchlist or portfolio, or discover 885 more undervalued stocks based on cash flows.
For a profitable company, the P/E ratio is a useful way to think about what you are paying for each dollar of earnings. It connects directly to the question, “How many years of current earnings am I willing to pay for this business?” which makes it intuitive for most investors.
What counts as a “normal” or “fair” P/E usually reflects two things: how the market views the company’s growth potential, and how risky those earnings are perceived to be. Higher expected growth and lower perceived risk often line up with a higher P/E, while slower growth or higher uncertainty often sit at the lower end of the range.
AGNC Investment currently trades on a P/E of 18.43x. That sits above the Mortgage REITs industry average of 12.98x and below the peer group average of 22.26x. Simply Wall St’s Fair Ratio for AGNC is 19.49x, which is its proprietary estimate of what a “justified” P/E could look like based on factors such as earnings growth, risk profile, profit margins, industry and market capitalization. This Fair Ratio goes beyond simple peer or industry comparisons because it adjusts for the company’s own characteristics rather than assuming all firms deserve similar multiples. With the current P/E modestly below the Fair Ratio, the multiple points to AGNC Investment being modestly undervalued on this measure.
Result: UNDERVALUED
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1425 companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand value, so let us introduce you to Narratives, a simple way for you to attach your own story about AGNC Investment to the numbers that matter, like fair value, future revenue, earnings and margins.
A Narrative links what you believe about the business to a financial forecast, then connects that forecast to a fair value estimate that you can compare directly with today’s share price to help decide whether AGNC Investment looks attractive, fairly priced, or expensive to you.
On Simply Wall St’s Community page, which is used by millions of investors, Narratives are an accessible tool where you can see different fair value estimates for AGNC Investment, understand the assumptions behind them, and quickly compare those to the current market price.
Narratives are updated as new information arrives, such as earnings or company news. You might see one investor assigning a higher fair value based on more optimistic margin assumptions, while another uses a lower fair value with more conservative expectations for AGNC Investment’s future returns.
Do you think there’s more to the story for AGNC Investment? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include AGNC.
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