Intrinsic value of Invesco Mortgage Capital - IVR

Previous Close

$16.07

  Intrinsic Value

$20.40

stock screener

  Rating & Target

buy

+27%

Previous close

$16.07

 
Intrinsic value

$20.40

 
Up/down potential

+27%

 
Rating

buy

Our model is not good at valuating stocks of financial companies, such as IVR.

We calculate the intrinsic value of IVR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -26.31
  32.80
  30.02
  27.52
  25.27
  23.24
  21.42
  19.77
  18.30
  16.97
  15.77
  14.69
  13.72
  12.85
  12.07
  11.36
  10.72
  10.15
  9.64
  9.17
  8.76
  8.38
  8.04
  7.74
  7.46
  7.22
  7.00
  6.80
  6.62
  6.45
  6.31
Revenue, $m
  479
  529
  687
  876
  1,098
  1,353
  1,643
  1,967
  2,327
  2,722
  3,151
  3,615
  4,111
  4,639
  5,199
  5,789
  6,410
  7,061
  7,741
  8,451
  9,191
  9,961
  10,762
  11,595
  12,461
  13,360
  14,295
  15,266
  16,276
  17,327
  18,420
Variable operating expenses, $m
 
  15
  19
  23
  28
  34
  41
  49
  57
  66
  77
  85
  96
  109
  122
  136
  150
  166
  182
  198
  216
  234
  253
  272
  292
  314
  335
  358
  382
  407
  432
Fixed operating expenses, $m
 
  35
  36
  36
  37
  38
  39
  40
  40
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  53
  54
  55
  56
  57
  59
  60
  61
  63
  64
  65
Total operating expenses, $m
  199
  50
  55
  59
  65
  72
  80
  89
  97
  107
  119
  128
  140
  154
  168
  183
  198
  215
  232
  249
  269
  288
  308
  328
  349
  373
  395
  419
  445
  471
  497
Operating income, $m
  280
  479
  633
  817
  1,032
  1,281
  1,563
  1,879
  2,230
  2,614
  3,033
  3,487
  3,970
  4,485
  5,031
  5,606
  6,211
  6,846
  7,509
  8,201
  8,923
  9,674
  10,455
  11,267
  12,111
  12,988
  13,899
  14,847
  15,832
  16,856
  17,922
EBITDA, $m
  280
  2,767
  3,608
  4,610
  5,783
  7,134
  8,670
  10,391
  12,298
  14,391
  16,666
  19,120
  21,749
  24,549
  27,516
  30,646
  33,936
  37,385
  40,991
  44,754
  48,676
  52,758
  57,004
  61,418
  66,005
  70,772
  75,726
  80,875
  86,229
  91,798
  97,592
Interest expense (income), $m
  147
  979
  974
  969
  962
  954
  945
  935
  923
  911
  897
  881
  865
  847
  829
  809
  788
  766
  743
  719
  693
  667
  640
  612
  582
  551
  519
  486
  452
  416
  379
Earnings before tax, $m
  258
  -500
  -341
  -152
  70
  326
  618
  944
  1,306
  1,704
  2,136
  2,605
  3,105
  3,638
  4,202
  4,797
  5,424
  6,080
  6,766
  7,483
  8,229
  9,007
  9,815
  10,655
  11,529
  12,437
  13,380
  14,360
  15,380
  16,440
  17,544
Tax expense, $m
  0
  0
  0
  0
  19
  88
  167
  255
  353
  460
  577
  703
  838
  982
  1,135
  1,295
  1,464
  1,642
  1,827
  2,020
  2,222
  2,432
  2,650
  2,877
  3,113
  3,358
  3,613
  3,877
  4,153
  4,439
  4,737
Net income, $m
  254
  -500
  -341
  -152
  51
  238
  451
  689
  954
  1,244
  1,559
  1,902
  2,267
  2,655
  3,067
  3,502
  3,959
  4,438
  4,939
  5,462
  6,007
  6,575
  7,165
  7,778
  8,416
  9,079
  9,767
  10,483
  11,227
  12,001
  12,807

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  162
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  15,706
  -769
  -1,000
  -1,276
  -1,598
  -1,969
  -2,391
  -2,864
  -3,388
  -3,962
  -4,587
  -5,261
  -5,983
  -6,752
  -7,567
  -8,427
  -9,330
  -10,278
  -11,268
  -12,302
  -13,379
  -14,500
  -15,666
  -16,878
  -18,138
  -19,447
  -20,807
  -22,221
  -23,692
  -25,221
  -26,812
Adjusted assets (=assets-cash), $m
  15,544
  -769
  -1,000
  -1,276
  -1,598
  -1,969
  -2,391
  -2,864
  -3,388
  -3,962
  -4,587
  -5,261
  -5,983
  -6,752
  -7,567
  -8,427
  -9,330
  -10,278
  -11,268
  -12,302
  -13,379
  -14,500
  -15,666
  -16,878
  -18,138
  -19,447
  -20,807
  -22,221
  -23,692
  -25,221
  -26,812
Revenue / Adjusted assets
  0.031
  -0.688
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
  -0.687
Average production assets, $m
  0
  22,861
  29,723
  37,903
  47,479
  58,513
  71,044
  85,092
  100,661
  117,741
  136,309
  156,337
  177,792
  200,641
  224,852
  250,394
  277,246
  305,390
  334,818
  365,530
  397,534
  430,846
  465,494
  501,513
  538,945
  577,843
  618,268
  660,286
  703,975
  749,416
  796,699
Working capital, $m
  0
  -21,259
  -27,641
  -35,247
  -44,153
  -54,414
  -66,067
  -79,131
  -93,610
  -109,492
  -126,760
  -145,385
  -165,337
  -186,586
  -209,100
  -232,853
  -257,824
  -283,996
  -311,363
  -339,923
  -369,685
  -400,663
  -432,884
  -466,379
  -501,189
  -537,363
  -574,955
  -614,030
  -654,658
  -696,916
  -740,887
Total debt, $m
  13,208
  18,042
  17,938
  17,814
  17,669
  17,501
  17,311
  17,098
  16,862
  16,602
  16,321
  16,017
  15,691
  15,344
  14,977
  14,589
  14,181
  13,754
  13,308
  12,841
  12,356
  11,850
  11,324
  10,778
  10,209
  9,619
  9,005
  8,368
  7,705
  7,015
  6,297
Total liabilities, $m
  13,465
  -347
  -451
  -575
  -721
  -888
  -1,078
  -1,292
  -1,528
  -1,787
  -2,069
  -2,373
  -2,699
  -3,045
  -3,413
  -3,800
  -4,208
  -4,635
  -5,082
  -5,548
  -6,034
  -6,539
  -7,065
  -7,612
  -8,180
  -8,770
  -9,384
  -10,022
  -10,685
  -11,375
  -12,092
Total equity, $m
  2,242
  -422
  -549
  -700
  -877
  -1,081
  -1,313
  -1,572
  -1,860
  -2,175
  -2,518
  -2,888
  -3,285
  -3,707
  -4,154
  -4,626
  -5,122
  -5,642
  -6,186
  -6,754
  -7,345
  -7,960
  -8,600
  -9,266
  -9,958
  -10,676
  -11,423
  -12,199
  -13,007
  -13,846
  -14,720
Total liabilities and equity, $m
  15,707
  -769
  -1,000
  -1,275
  -1,598
  -1,969
  -2,391
  -2,864
  -3,388
  -3,962
  -4,587
  -5,261
  -5,984
  -6,752
  -7,567
  -8,426
  -9,330
  -10,277
  -11,268
  -12,302
  -13,379
  -14,499
  -15,665
  -16,878
  -18,138
  -19,446
  -20,807
  -22,221
  -23,692
  -25,221
  -26,812
Debt-to-equity ratio
  5.891
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
Adjusted equity ratio
  0.144
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  254
  -500
  -341
  -152
  51
  238
  451
  689
  954
  1,244
  1,559
  1,902
  2,267
  2,655
  3,067
  3,502
  3,959
  4,438
  4,939
  5,462
  6,007
  6,575
  7,165
  7,778
  8,416
  9,079
  9,767
  10,483
  11,227
  12,001
  12,807
Depreciation, amort., depletion, $m
  0
  2,289
  2,975
  3,793
  4,751
  5,854
  7,107
  8,512
  10,069
  11,777
  13,633
  15,634
  17,779
  20,064
  22,485
  25,039
  27,725
  30,539
  33,482
  36,553
  39,753
  43,085
  46,549
  50,151
  53,894
  57,784
  61,827
  66,029
  70,397
  74,942
  79,670
Funds from operations, $m
  331
  1,789
  2,634
  3,641
  4,802
  6,092
  7,558
  9,201
  11,022
  13,020
  15,193
  17,535
  20,046
  22,720
  25,553
  28,542
  31,684
  34,977
  38,421
  42,015
  45,761
  49,659
  53,714
  57,930
  62,311
  66,863
  71,594
  76,512
  81,625
  86,943
  92,477
Change in working capital, $m
  1
  -5,251
  -6,382
  -7,606
  -8,906
  -10,261
  -11,653
  -13,064
  -14,478
  -15,883
  -17,267
  -18,625
  -19,953
  -21,248
  -22,514
  -23,753
  -24,971
  -26,173
  -27,367
  -28,560
  -29,762
  -30,979
  -32,221
  -33,495
  -34,810
  -36,173
  -37,593
  -39,075
  -40,628
  -42,258
  -43,971
Cash from operations, $m
  330
  7,039
  9,016
  11,247
  13,708
  16,353
  19,211
  22,265
  25,501
  28,903
  32,460
  36,161
  39,998
  43,968
  48,067
  52,295
  56,654
  61,150
  65,788
  70,576
  75,522
  80,638
  85,935
  91,425
  97,121
  103,036
  109,187
  115,587
  122,252
  129,200
  136,448
Maintenance CAPEX, $m
  0
  -1,721
  -2,286
  -2,972
  -3,790
  -4,748
  -5,851
  -7,104
  -8,509
  -10,066
  -11,774
  -13,631
  -15,634
  -17,779
  -20,064
  -22,485
  -25,039
  -27,725
  -30,539
  -33,482
  -36,553
  -39,753
  -43,085
  -46,549
  -50,151
  -53,894
  -57,784
  -61,827
  -66,029
  -70,397
  -74,942
New CAPEX, $m
  0
  -5,655
  -6,863
  -8,179
  -9,577
  -11,034
  -12,531
  -14,048
  -15,569
  -17,079
  -18,568
  -20,028
  -21,456
  -22,849
  -24,210
  -25,543
  -26,852
  -28,144
  -29,428
  -30,712
  -32,003
  -33,313
  -34,648
  -36,018
  -37,432
  -38,898
  -40,425
  -42,019
  -43,688
  -45,441
  -47,284
Cash from investing activities, $m
  949
  -7,376
  -9,149
  -11,151
  -13,367
  -15,782
  -18,382
  -21,152
  -24,078
  -27,145
  -30,342
  -33,659
  -37,090
  -40,628
  -44,274
  -48,028
  -51,891
  -55,869
  -59,967
  -64,194
  -68,556
  -73,066
  -77,733
  -82,567
  -87,583
  -92,792
  -98,209
  -103,846
  -109,717
  -115,838
  -122,226
Free cash flow, $m
  1,279
  -336
  -133
  96
  341
  571
  829
  1,113
  1,422
  1,758
  2,118
  2,502
  2,909
  3,340
  3,792
  4,267
  4,763
  5,281
  5,821
  6,382
  6,966
  7,572
  8,203
  8,857
  9,537
  10,243
  10,978
  11,741
  12,536
  13,362
  14,223
Issuance/(repayment) of debt, $m
  -967
  -86
  -104
  -124
  -145
  -167
  -190
  -213
  -236
  -259
  -282
  -304
  -326
  -347
  -367
  -388
  -408
  -427
  -447
  -466
  -486
  -506
  -526
  -547
  -568
  -590
  -614
  -638
  -663
  -690
  -718
Issuance/(repurchase) of shares, $m
  -25
  -104
  -127
  -151
  -177
  -204
  -232
  -260
  -288
  -316
  -343
  -370
  -396
  -422
  -447
  -472
  -496
  -520
  -544
  -567
  -591
  -615
  -640
  -665
  -692
  -719
  -747
  -776
  -807
  -840
  -874
Cash from financing (excl. dividends), $m  
  -966
  -190
  -231
  -275
  -322
  -371
  -422
  -473
  -524
  -575
  -625
  -674
  -722
  -769
  -814
  -860
  -904
  -947
  -991
  -1,033
  -1,077
  -1,121
  -1,166
  -1,212
  -1,260
  -1,309
  -1,361
  -1,414
  -1,470
  -1,530
  -1,592
Total cash flow (excl. dividends), $m
  313
  -526
  -364
  -180
  18
  200
  407
  640
  898
  1,183
  1,493
  1,828
  2,187
  2,571
  2,978
  3,407
  3,860
  4,334
  4,830
  5,349
  5,889
  6,451
  7,036
  7,645
  8,277
  8,934
  9,617
  10,327
  11,065
  11,833
  12,631
Retained Cash Flow (-), $m
  -1
  -396
  -215
  -1
  177
  204
  232
  260
  288
  316
  343
  370
  396
  422
  447
  472
  496
  520
  544
  567
  591
  615
  640
  665
  692
  719
  747
  776
  807
  840
  874
Prev. year cash balance distribution, $m
 
  318
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  1
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
Cash available for distribution, $m
 
  -396
  -215
  -1
  195
  404
  638
  899
  1,186
  1,499
  1,836
  2,198
  2,584
  2,993
  3,425
  3,879
  4,356
  4,854
  5,374
  5,916
  6,480
  7,067
  7,677
  8,310
  8,969
  9,653
  10,364
  11,104
  11,872
  12,672
  13,505
Discount rate, %
 
  13.60
  14.28
  14.99
  15.74
  16.53
  17.36
  18.23
  19.14
  20.09
  21.10
  22.15
  23.26
  24.42
  25.64
  26.93
  28.27
  29.69
  31.17
  32.73
  34.37
  36.08
  37.89
  39.78
  41.77
  43.86
  46.05
  48.36
  50.78
  53.31
  55.98
PV of cash for distribution, $m
 
  -349
  -164
  0
  109
  188
  244
  279
  292
  288
  271
  243
  210
  175
  140
  109
  81
  58
  41
  27
  18
  11
  7
  4
  2
  1
  1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Invesco Mortgage Capital Inc. is a holding company, which conducts its businesses through IAS Operating Partnership LP (the Operating Partnership) and subsidiaries. The Company's objective is to provide risk-adjusted returns to its investors through dividends and through capital appreciation. It invests in residential mortgage-backed securities that are guaranteed by the United States Government agency, such as the Government National Mortgage Association or a federally chartered corporation, such as the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation (collectively Agency RMBS); RMBS that are not guaranteed by the United States Government agency; Credit risk transfer securities that are unsecured obligations issued by government-sponsored enterprises; commercial mortgage-backed securities; residential and commercial mortgage loans, and other real estate-related financing arrangements. It is externally managed and advised by Invesco Advisers, Inc.

FINANCIAL RATIOS  of  Invesco Mortgage Capital (IVR)

Valuation Ratios
P/E Ratio 7.1
Price to Sales 3.7
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 5.4
Price to Free Cash Flow 5.4
Growth Rates
Sales Growth Rate -26.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 91.3%
Total Debt to Equity 589.1%
Interest Coverage 3
Management Effectiveness
Return On Assets 2.5%
Ret/ On Assets - 3 Yr. Avg. 1.4%
Return On Total Capital 1.6%
Ret/ On T. Cap. - 3 Yr. Avg. 0.4%
Return On Equity 11.3%
Return On Equity - 3 Yr. Avg. 2.5%
Asset Turnover 0
Profitability Ratios
Gross Margin 59.9%
Gross Margin - 3 Yr. Avg. 55%
EBITDA Margin 84.6%
EBITDA Margin - 3 Yr. Avg. 43.6%
Operating Margin 58.5%
Oper. Margin - 3 Yr. Avg. 52.9%
Pre-Tax Margin 53.9%
Pre-Tax Margin - 3 Yr. Avg. 13.2%
Net Profit Margin 53%
Net Profit Margin - 3 Yr. Avg. 13%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 80.3%

IVR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IVR stock intrinsic value calculation we used $398 million for the last fiscal year's total revenue generated by Invesco Mortgage Capital. The default revenue input number comes from 2016 income statement of Invesco Mortgage Capital. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our IVR stock valuation model: a) initial revenue growth rate of 32.8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 13.6%, whose default value for IVR is calculated based on our internal credit rating of Invesco Mortgage Capital, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Invesco Mortgage Capital.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of IVR stock the variable cost ratio is equal to 3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $34 million in the base year in the intrinsic value calculation for IVR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Invesco Mortgage Capital.

Corporate tax rate of 27% is the nominal tax rate for Invesco Mortgage Capital. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the IVR stock is equal to 0.1%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for IVR are equal to 4325.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Invesco Mortgage Capital operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for IVR is equal to -4022.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $0 million for Invesco Mortgage Capital - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 112 million for Invesco Mortgage Capital is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Invesco Mortgage Capital at the current share price and the inputted number of shares is $1.8 billion.

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COMPANY NEWS

▶ Invesco Mortgage Capital Inc. to Host Earnings Call   [May-04-18 07:15AM  ACCESSWIRE]
▶ Invesco Mortgage Capital: 1Q Earnings Snapshot   [05:09AM  Associated Press]
▶ Invesco Mortgage Capital posts 4Q profit   [Feb-20-18 07:04PM  Associated Press]
▶ Stocks Showing Improved Relative Strength: Invesco Mortgage Capital   [Dec-05-17 03:00AM  Investor's Business Daily]
▶ Invesco Mortgage Capital Inc. to Host Earnings Call   [Nov-07-17 07:10AM  ACCESSWIRE]
▶ Invesco Mortgage Capital posts 3Q profit   [Nov-06-17 05:29PM  Associated Press]
▶ Invesco Mortgage Capital Increases Dividend   [Sep-20-17 06:05PM  GuruFocus.com]
▶ Invesco Mortgage Capital posts 2Q profit   [12:01AM  Associated Press]
▶ Invesco Mortgage Capital posts 1Q profit   [May-04-17 07:29PM  Associated Press]
▶ Income-REIT New Residential Investment Looks Worth It   [Apr-12-17 04:43PM  TheStreet.com]
▶ Invesco Mortgage Capital posts 4Q profit   [Feb-21-17 06:18PM  Associated Press]
Financial statements of IVR
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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