Intrinsic value of AG Mortgage Investment Trust - MITT

Previous Close

$17.36

  Intrinsic Value

$10.63

stock screener

  Rating & Target

sell

-39%

Previous close

$17.36

 
Intrinsic value

$10.63

 
Up/down potential

-39%

 
Rating

sell

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

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of MITT 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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of AG Mortgage Investment Trust (MITT) stock.

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, %
  -12.77
  9.70
  9.23
  8.81
  8.43
  8.08
  7.78
  7.50
  7.25
  7.02
  6.82
  6.64
  6.47
  6.33
  6.19
  6.08
  5.97
  5.87
  5.78
  5.71
  5.63
  5.57
  5.51
  5.46
  5.42
  5.37
  5.34
  5.30
  5.27
  5.25
  5.22
Revenue, $m
  123
  135
  147
  160
  174
  188
  203
  218
  234
  250
  267
  285
  303
  322
  342
  363
  385
  407
  431
  455
  481
  508
  536
  565
  596
  628
  661
  696
  733
  772
  812
Variable operating expenses, $m
 
  125
  137
  149
  161
  174
  188
  202
  216
  232
  247
  264
  281
  299
  317
  337
  357
  378
  399
  422
  446
  471
  497
  524
  552
  582
  613
  646
  680
  715
  753
Fixed operating expenses, $m
 
  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 operating expenses, $m
  61
  125
  137
  149
  161
  174
  188
  202
  216
  232
  247
  264
  281
  299
  317
  337
  357
  378
  399
  422
  446
  471
  497
  524
  552
  582
  613
  646
  680
  715
  753
Operating income, $m
  62
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  21
  22
  24
  25
  27
  28
  30
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
  54
  56
  59
EBITDA, $m
  62
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  21
  22
  24
  25
  27
  28
  30
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
  54
  56
  59
Interest expense (income), $m
  32
  65
  72
  78
  85
  93
  100
  108
  116
  125
  134
  143
  153
  163
  173
  184
  195
  207
  219
  232
  246
  260
  274
  289
  305
  322
  339
  357
  377
  396
  417
Earnings before tax, $m
  62
  -56
  -61
  -67
  -73
  -79
  -86
  -92
  -99
  -107
  -114
  -122
  -131
  -139
  -148
  -158
  -167
  -177
  -188
  -199
  -211
  -222
  -235
  -248
  -262
  -276
  -291
  -307
  -323
  -340
  -358
Tax expense, $m
  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
  0
Net income, $m
  64
  -56
  -61
  -67
  -73
  -79
  -86
  -92
  -99
  -107
  -114
  -122
  -131
  -139
  -148
  -158
  -167
  -177
  -188
  -199
  -211
  -222
  -235
  -248
  -262
  -276
  -291
  -307
  -323
  -340
  -358

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  52
  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
  2,629
  2,811
  3,071
  3,341
  3,622
  3,915
  4,220
  4,536
  4,865
  5,207
  5,562
  5,931
  6,315
  6,715
  7,130
  7,564
  8,015
  8,486
  8,976
  9,488
  10,023
  10,582
  11,165
  11,775
  12,413
  13,080
  13,778
  14,509
  15,274
  16,075
  16,915
Adjusted assets (=assets-cash), $m
  2,577
  2,811
  3,071
  3,341
  3,622
  3,915
  4,220
  4,536
  4,865
  5,207
  5,562
  5,931
  6,315
  6,715
  7,130
  7,564
  8,015
  8,486
  8,976
  9,488
  10,023
  10,582
  11,165
  11,775
  12,413
  13,080
  13,778
  14,509
  15,274
  16,075
  16,915
Revenue / Adjusted assets
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
Average production assets, $m
  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
  0
Working capital, $m
  0
  67
  74
  80
  87
  94
  101
  109
  117
  125
  133
  142
  152
  161
  171
  182
  192
  204
  215
  228
  241
  254
  268
  283
  298
  314
  331
  348
  367
  386
  406
Total debt, $m
  1,922
  2,043
  2,237
  2,438
  2,648
  2,866
  3,093
  3,328
  3,573
  3,828
  4,092
  4,368
  4,654
  4,951
  5,261
  5,584
  5,920
  6,271
  6,636
  7,018
  7,416
  7,832
  8,267
  8,721
  9,197
  9,694
  10,214
  10,758
  11,328
  11,925
  12,550
Total liabilities, $m
  1,973
  2,094
  2,288
  2,489
  2,699
  2,917
  3,144
  3,379
  3,624
  3,879
  4,143
  4,419
  4,705
  5,002
  5,312
  5,635
  5,971
  6,322
  6,687
  7,069
  7,467
  7,883
  8,318
  8,772
  9,248
  9,745
  10,265
  10,809
  11,379
  11,976
  12,601
Total equity, $m
  656
  717
  783
  852
  924
  998
  1,076
  1,157
  1,241
  1,328
  1,418
  1,512
  1,610
  1,712
  1,818
  1,929
  2,044
  2,164
  2,289
  2,420
  2,556
  2,698
  2,847
  3,003
  3,165
  3,335
  3,513
  3,700
  3,895
  4,099
  4,313
Total liabilities and equity, $m
  2,629
  2,811
  3,071
  3,341
  3,623
  3,915
  4,220
  4,536
  4,865
  5,207
  5,561
  5,931
  6,315
  6,714
  7,130
  7,564
  8,015
  8,486
  8,976
  9,489
  10,023
  10,581
  11,165
  11,775
  12,413
  13,080
  13,778
  14,509
  15,274
  16,075
  16,914
Debt-to-equity ratio
  2.930
  2.850
  2.860
  2.860
  2.870
  2.870
  2.870
  2.880
  2.880
  2.880
  2.890
  2.890
  2.890
  2.890
  2.890
  2.900
  2.900
  2.900
  2.900
  2.900
  2.900
  2.900
  2.900
  2.900
  2.910
  2.910
  2.910
  2.910
  2.910
  2.910
  2.910
Adjusted equity ratio
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  64
  -56
  -61
  -67
  -73
  -79
  -86
  -92
  -99
  -107
  -114
  -122
  -131
  -139
  -148
  -158
  -167
  -177
  -188
  -199
  -211
  -222
  -235
  -248
  -262
  -276
  -291
  -307
  -323
  -340
  -358
Depreciation, amort., depletion, $m
  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
  0
Funds from operations, $m
  67
  -56
  -61
  -67
  -73
  -79
  -86
  -92
  -99
  -107
  -114
  -122
  -131
  -139
  -148
  -158
  -167
  -177
  -188
  -199
  -211
  -222
  -235
  -248
  -262
  -276
  -291
  -307
  -323
  -340
  -358
Change in working capital, $m
  0
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
Cash from operations, $m
  67
  -62
  -67
  -73
  -79
  -86
  -93
  -100
  -107
  -115
  -123
  -131
  -140
  -149
  -158
  -168
  -178
  -189
  -200
  -211
  -223
  -236
  -249
  -263
  -277
  -292
  -308
  -324
  -341
  -359
  -378
Maintenance CAPEX, $m
  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
  0
New CAPEX, $m
  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
  0
Cash from investing activities, $m
  541
  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
Free cash flow, $m
  608
  -62
  -67
  -73
  -79
  -86
  -93
  -100
  -107
  -115
  -123
  -131
  -140
  -149
  -158
  -168
  -178
  -189
  -200
  -211
  -223
  -236
  -249
  -263
  -277
  -292
  -308
  -324
  -341
  -359
  -378
Issuance/(repayment) of debt, $m
  -529
  173
  193
  201
  210
  218
  227
  236
  245
  255
  265
  275
  286
  298
  310
  323
  336
  351
  366
  382
  398
  416
  435
  454
  475
  497
  520
  544
  570
  597
  625
Issuance/(repurchase) of shares, $m
  -10
  116
  127
  136
  144
  154
  163
  173
  183
  194
  205
  217
  229
  241
  254
  268
  282
  297
  313
  330
  347
  365
  384
  404
  424
  446
  469
  493
  518
  544
  572
Cash from financing (excl. dividends), $m  
  -534
  289
  320
  337
  354
  372
  390
  409
  428
  449
  470
  492
  515
  539
  564
  591
  618
  648
  679
  712
  745
  781
  819
  858
  899
  943
  989
  1,037
  1,088
  1,141
  1,197
Total cash flow (excl. dividends), $m
  73
  228
  253
  264
  275
  286
  297
  309
  321
  333
  347
  360
  375
  390
  406
  423
  441
  459
  479
  500
  522
  545
  569
  595
  622
  651
  681
  713
  747
  782
  819
Retained Cash Flow (-), $m
  11
  -116
  -127
  -136
  -144
  -154
  -163
  -173
  -183
  -194
  -205
  -217
  -229
  -241
  -254
  -268
  -282
  -297
  -313
  -330
  -347
  -365
  -384
  -404
  -424
  -446
  -469
  -493
  -518
  -544
  -572
Prev. year cash balance distribution, $m
 
  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
Cash flow adjustment, $m
 
  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
Cash available for distribution, $m
 
  112
  126
  128
  130
  132
  134
  136
  138
  140
  142
  144
  146
  149
  152
  155
  158
  162
  166
  170
  175
  180
  186
  192
  198
  205
  212
  220
  229
  238
  247
Discount rate, %
 
  11.90
  12.50
  13.12
  13.78
  14.46
  15.19
  15.95
  16.74
  17.58
  18.46
  19.38
  20.35
  21.37
  22.44
  23.56
  24.74
  25.98
  27.28
  28.64
  30.07
  31.57
  33.15
  34.81
  36.55
  38.38
  40.30
  42.31
  44.43
  46.65
  48.98
PV of cash for distribution, $m
 
  100
  100
  89
  78
  67
  57
  48
  40
  32
  26
  20
  16
  12
  9
  6
  5
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  80.9
  65.6
  53.3
  43.5
  35.7
  29.3
  24.2
  20.0
  16.5
  13.7
  11.4
  9.5
  7.9
  6.6
  5.5
  4.6
  3.9
  3.3
  2.7
  2.3
  1.9
  1.6
  1.4
  1.2
  1.0
  0.8
  0.7
  0.6
  0.5
  0.4

AG Mortgage Investment Trust, Inc. is a real estate investment trust (REIT). The Company focuses on investing in, acquiring and managing a diversified portfolio of residential mortgage assets, other real estate-related securities and financial assets, which the Company refers to as its target assets. It also focuses on investing in residential mortgage-backed securities (RMBS) issued or guaranteed by a government-sponsored enterprise, such as The Federal National Mortgage Association (Fannie Mae) or The Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively, GSEs), or any agency of the United States Government, such as The Government National Mortgage Association (Ginnie Mae) (collectively Agency RMBS), and other real estate-related securities and financial assets, including Non-Agency RMBS, asset backed securities (ABS), commercial mortgage-backed securities (CMBS) and loans.

FINANCIAL RATIOS  of  AG Mortgage Investment Trust (MITT)

Valuation Ratios
P/E Ratio 7.5
Price to Sales 3.9
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 7.2
Price to Free Cash Flow 7.2
Growth Rates
Sales Growth Rate -12.8%
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 3.2%
Total Debt to Equity 293%
Interest Coverage 3
Management Effectiveness
Return On Assets 3.3%
Ret/ On Assets - 3 Yr. Avg. 2.8%
Return On Total Capital 2.2%
Ret/ On T. Cap. - 3 Yr. Avg. 1.9%
Return On Equity 9.7%
Return On Equity - 3 Yr. Avg. 8.9%
Asset Turnover 0
Profitability Ratios
Gross Margin 64.2%
Gross Margin - 3 Yr. Avg. 69.2%
EBITDA Margin 76.4%
EBITDA Margin - 3 Yr. Avg. 66.1%
Operating Margin 50.4%
Oper. Margin - 3 Yr. Avg. 44%
Pre-Tax Margin 50.4%
Pre-Tax Margin - 3 Yr. Avg. 44%
Net Profit Margin 52%
Net Profit Margin - 3 Yr. Avg. 46.2%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 104.7%

MITT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MITT stock intrinsic value calculation we used $123 million for the last fiscal year's total revenue generated by AG Mortgage Investment Trust. The default revenue input number comes from 2016 income statement of AG Mortgage Investment Trust. 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 MITT stock valuation model: a) initial revenue growth rate of 9.7% 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 11.9%, whose default value for MITT is calculated based on our internal credit rating of AG Mortgage Investment Trust, 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 AG Mortgage Investment Trust.
    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 MITT stock the variable cost ratio is equal to 92.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for MITT 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 3.5% for AG Mortgage Investment Trust.

Corporate tax rate of 27% is the nominal tax rate for AG Mortgage Investment Trust. 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 MITT stock is equal to 0%.

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 MITT are equal to 0%.

Life of production assets of 10 years is the average useful life of capital assets used in AG Mortgage Investment Trust 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 MITT is equal to 50%. 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 - $656 million for AG Mortgage Investment Trust - 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 28.489 million for AG Mortgage Investment Trust 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 AG Mortgage Investment Trust at the current share price and the inputted number of shares is $0.5 billion.

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COMPANY NEWS

▶ AG Mortgage Investment Trust posts 3Q profit   [Oct-31-17 05:07PM  Associated Press]
▶ AG Mortgage Investment Trust posts 2Q profit   [Aug-09-17 11:00PM  Associated Press]
▶ New Strong Sell Stocks for June 5th   [Jun-05-17 10:56AM  Zacks]
▶ New Strong Sell Stocks for May 22nd   [May-22-17 09:08AM  Zacks]
▶ New Strong Sell Stocks for May 12th   [May-12-17 11:02AM  Zacks]
▶ New Strong Sell Stocks for May 9th   [May-09-17 10:57AM  Zacks]
▶ AG Mortgage Investment Trust posts 1Q profit   [May-04-17 05:03AM  Associated Press]
▶ AG Mortgage Investment Trust posts 4Q loss   [05:02AM  Associated Press]
Financial statements of MITT
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