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Armour Residential (ARR)
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ARMOUR Residential REIT (ARR) AI Stock Analysis

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ARR

ARMOUR Residential REIT

(NYSE:ARR)

Rating:48Neutral
Price Target:
ARMOUR Residential REIT faces significant challenges, primarily due to operational inefficiencies and unstable revenue. The financial performance is further hampered by a negative P/E ratio, despite a high dividend yield. Technical indicators suggest potential downward momentum. The earnings call highlights strong liquidity and strategic efforts, but also notes concerns about market volatility and book value decline.
Positive Factors
Dividends
Steady rate volatility supports a high-teens dividend yield.
Liquidity
The company has raised $640 million of capital over the last year, including $370 million last quarter, boosting liquidity and daily trading volume in the stock by more than 30%.
Valuation
Upgrading ARR shares to BUY from Neutral indicates compelling relative value and total return opportunities.
Negative Factors
Earnings
1Q25 results missed Street expectations, and book value per share is trailing expectations year-to-date in 2025.
Economic Return
Total economic return of 1.3% in 1Q25 was at the low end of the peer-group range and missed the +2.5% estimate.
Volatility
There could be disproportionate downside in response to higher volatility and wider spreads.

ARMOUR Residential REIT (ARR) vs. SPDR S&P 500 ETF (SPY)

ARMOUR Residential REIT Business Overview & Revenue Model

Company DescriptionARMOUR Residential REIT, Inc. invests in residential mortgage-backed securities (MBS) in the United States. The company's securities portfolio primarily consists of the United States Government-sponsored entity's (GSE) and the Government National Mortgage Administration's issued or guaranteed securities backed by fixed rate, hybrid adjustable rate, and adjustable-rate home loans, as well as unsecured notes and bonds issued by the GSE and the United States treasuries, as well as money market instruments. It also invests in other securities backed by residential mortgages for which the payment of principal and interest is not guaranteed by a GSE or government agency. The company has elected to be taxed as a real estate investment trust under the Internal Revenue Code. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. ARMOUR Residential REIT, Inc. was incorporated in 2008 and is based in Vero Beach, Florida.
How the Company Makes MoneyARMOUR Residential REIT makes money through the management and investment in agency mortgage-backed securities (MBS). The company generates revenue by earning interest income on its MBS portfolio, which consists mostly of fixed-rate and adjustable-rate residential mortgage securities. ARMOUR Residential REIT profits from the spread between the yield on its MBS investments and the cost of borrowing funds to finance these investments. The company employs hedging strategies to manage interest rate risk and aims to optimize its portfolio to enhance returns while maintaining a stable risk profile. Key revenue streams for ARMOUR Residential REIT include interest income from its MBS holdings and gains from the sale of securities in its portfolio. Significant factors contributing to its earnings include the overall interest rate environment, the shape of the yield curve, and the company's ability to effectively hedge its interest rate exposure.

ARMOUR Residential REIT Earnings Call Summary

Earnings Call Date:Jul 23, 2025
(Q2-2025)
|
% Change Since: -0.53%|
Next Earnings Date:Oct 22, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. While ARMOUR has managed to maintain strong liquidity and stable dividends, significant challenges persist, including a substantial net loss and volatility in spreads. However, the company remains optimistic about potential improvements in banking demand and regulatory clarity. Overall, the sentiment is balanced with both positive and negative aspects.
Q2-2025 Updates
Positive Updates
Capital Raised Through ATM Offering
ARMOUR raised approximately $104.6 million of capital by issuing approximately 6.3 million shares of common stock through an at-the-market offering program. Since June 30, an additional $58.8 million was raised by issuing approximately 3.5 million shares.
Strong Liquidity Position
ARMOUR's total liquidity is strong at approximately 52% of the total capital as of July 21.
Dividend Stability
ARMOUR paid monthly common stock dividends per share of $0.24 per common share per month for a total of $0.72 for the quarter, indicating a stable return for shareholders.
Agency MBS Portfolio Performance
The MBS portfolio remains concentrated in production MBS with return on equities (ROEs) in the 18% to 20% range, indicating strong performance.
Negative Updates
GAAP Net Loss
ARMOUR's Q2 GAAP net loss related to common stockholders was $78.6 million or $0.94 per common share.
Volatility in Spreads
The MBS to SOFR spreads widened by approximately 10 basis points quarter-over-quarter and remain historically cheap, indicating volatility.
Challenges in Banking Demand
Bank demand for MBS has been disappointing year-to-date, with regulatory factors affecting participation.
Company Guidance
During the ARMOUR Residential REIT's Second Quarter 2025 Earnings Conference Call, the company reported a GAAP net loss of $78.6 million, or $0.94 per common share, with net interest income of $33.1 million. Distributable earnings available to common stockholders were $64.9 million, or $0.77 per common share. A portion of management fees totaling $1.65 million was waived by ARMOUR Capital Management to offset operating expenses. During the quarter, ARMOUR raised approximately $104.6 million through an at-the-market offering, issuing 6.3 million shares of common stock, with an additional $58.8 million raised post-June 30 by issuing 3.5 million shares. The company paid monthly dividends totaling $0.72 per common share for the quarter and declared additional dividends for July and August. The quarter-ending book value was $16.90 per share, with an estimated book value of $16.81 as of July 21. ARMOUR's portfolio strategy remains focused on agency MBS, with ROEs in the 18% to 20% range, and a hedge book balanced with treasury shorts and swaps. The company remains optimistic about improving demand for MBS later in the year, supported by potential regulatory changes and Fed policy shifts.

ARMOUR Residential REIT Financial Statement Overview

Summary
The company's financial performance is challenged by operational inefficiencies and unstable revenue growth, as reflected by a negative EBIT margin and net profit margin. While the balance sheet is stable with prudent debt management, the cash flow statement shows strong cash generation but high investment outflows.
Income Statement
32
Negative
The company shows significant volatility in its revenue and profit margins over the years. The TTM data indicates a positive gross profit margin of 71.41%, yet it suffers from a negative EBIT margin of -187.64% and a net profit margin of -2.75%, highlighting operational inefficiencies and substantial losses. Revenue growth has seen major fluctuations, indicating instability in income generation.
Balance Sheet
45
Neutral
ARMOUR Residential REIT displays a solid equity ratio of 10.99% in the TTM, though the absence of debt is a positive indicator of leverage management. However, the company's return on equity remains negative, reflecting challenges in generating returns from equity investment. The balance sheet shows a stable equity position but lacks strong profitability metrics.
Cash Flow
58
Neutral
Despite operating cash flow being substantially positive, the free cash flow growth rate is negligible due to consistent capital expenditures. The TTM data shows a robust operating cash flow to net income ratio, indicating efficient cash generation relative to net income. However, cash flow from investing activities is heavily negative, reflecting high investment outlays.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue563.40M449.67M-225.87M19.17M-213.22M
Gross Profit39.26M-24.37M-458.12M-3.34M-44.41M
EBITDA509.75M457.87M-104.61M7.11M-151.13M
Net Income-14.39M-67.92M-229.93M15.36M-215.11M
Balance Sheet
Total Assets13.55B12.34B9.44B5.28B5.52B
Cash, Cash Equivalents and Short-Term Investments67.97M11.70B87.28M338.00M5.35B
Total Debt0.009.65B6.46B3.95B4.54B
Total Liabilities12.19B11.07B8.32B4.00M4.20M
Stockholders Equity1.36B1.27B1.11B1.14B938.30M
Cash Flow
Free Cash Flow261.46M132.82M124.08M11.74M-257.82M
Operating Cash Flow261.46M132.82M124.08M11.74M-257.82M
Investing Cash Flow-1.69B-3.04B-3.89B503.58M7.09B
Financing Cash Flow1.31B3.05B3.53B-330.77M-6.93B

ARMOUR Residential REIT Technical Analysis

Technical Analysis Sentiment
Positive
Last Price16.80
Price Trends
50DMA
16.34
Positive
100DMA
15.97
Positive
200DMA
16.55
Positive
Market Momentum
MACD
0.08
Positive
RSI
57.00
Neutral
STOCH
62.68
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARR, the sentiment is Positive. The current price of 16.8 is above the 20-day moving average (MA) of 16.60, above the 50-day MA of 16.34, and above the 200-day MA of 16.55, indicating a bullish trend. The MACD of 0.08 indicates Positive momentum. The RSI at 57.00 is Neutral, neither overbought nor oversold. The STOCH value of 62.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ARR.

ARMOUR Residential REIT Risk Analysis

ARMOUR Residential REIT disclosed 62 risk factors in its most recent earnings report. ARMOUR Residential REIT reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

ARMOUR Residential REIT Peers Comparison

Overall Rating
UnderperformOutperform
Sector (53)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
66
Neutral
$1.38B-0.35%10.06%-14.98%95.53%
65
Neutral
$1.22B9.369.59%12.28%11.91%52.26%
60
Neutral
$1.63B16.054.93%14.68%73.74%-34.10%
56
Neutral
$1.05B16.685.50%13.25%1.71%-56.69%
53
Neutral
$1.19B3.49-2.19%6.01%-2.24%-167.40%
53
Neutral
$1.04B5.06-14.78%17.35%-18.22%-114.40%
48
Neutral
$1.54B8.01-2.04%17.58%142.18%50.74%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ARR
ARMOUR Residential REIT
16.80
-0.42
-2.44%
ARI
Apollo Real Estate
9.94
0.81
8.87%
DX
Dynex Capital
12.53
1.92
18.10%
EFC
Ellington Financial
12.92
1.58
13.93%
TWO
Two Harbors
10.03
-1.60
-13.76%
PMT
PennyMac Mortgage
12.08
0.22
1.85%

ARMOUR Residential REIT Corporate Events

Business Operations and StrategyFinancial Disclosures
ARMOUR Residential REIT Releases Financial Position Report
Neutral
Apr 23, 2025

On April 23, 2025, ARMOUR Residential REIT, Inc. released a presentation detailing its financial position and operations, highlighting key data as of March 31, 2025. The report includes a common stock price of $17.10, a debt-equity ratio of 7.3, and total liquidity of $848 million. ARMOUR’s portfolio is heavily invested in 30-year fixed-rate pools, with a significant portion in agency CMBS and conventionals. The company maintains a strategic focus on managing interest rate and MBS price risks, with a commitment to sustaining common share dividends.

Spark’s Take on ARR Stock

According to Spark, TipRanks’ AI Analyst, ARR is a Neutral.

ARMOUR Residential REIT faces significant challenges. The weak financial performance, including consistent losses and revenue volatility, weighs heavily on the score. Technical analysis suggests bearish momentum, further impacting the stock negatively. While the high dividend yield and strategic capital raising are positives, they are offset by valuation concerns and earnings call risks. Overall, the stock’s outlook is cautious with potential areas for improvement.

To see Spark’s full report on ARR stock, click here.

Financial Disclosures
ARMOUR Residential REIT to Webcast Q1 2025 Results
Neutral
Apr 22, 2025

ARMOUR Residential REIT announced that it will host a real-time webcast of its conference call with equity analysts to discuss its first quarter 2025 operating results. The webcast is scheduled for April 24, 2025, following the release of the company’s earnings after trading closes on April 23, 2025. This event provides stakeholders with insights into the company’s financial performance and strategic positioning.

Spark’s Take on ARR Stock

According to Spark, TipRanks’ AI Analyst, ARR is a Neutral.

ARMOUR Residential REIT faces significant challenges. The weak financial performance, including consistent losses and revenue volatility, weighs heavily on the score. Technical analysis suggests bearish momentum, further impacting the stock negatively. While the high dividend yield and strategic capital raising are positives, they are offset by valuation concerns and earnings call risks. Overall, the stock’s outlook is cautious with potential areas for improvement.

To see Spark’s full report on ARR stock, click here.

DividendsBusiness Operations and StrategyFinancial Disclosures
ARMOUR Residential REIT Updates Financial Position and Dividend
Neutral
Mar 13, 2025

On March 13, 2025, ARMOUR Residential REIT, Inc. released a presentation detailing updates on its financial position, business, and operations. The presentation highlighted key financial metrics, including a common stock price of $19.05, a debt-equity ratio of 7.1, and total liquidity of $854.4 million as of February 28, 2025. The company also announced a March 2025 common dividend of $0.24, with an ex-dividend date of March 17, 2025, and a pay date of March 27, 2025. ARMOUR’s portfolio primarily consists of mortgage-backed securities, with a significant portion in 30-year fixed-rate pools. The announcement provides insights into ARMOUR’s strategic focus on maintaining dividends and managing interest rate risks, impacting its operations and stakeholder interests.

DividendsBusiness Operations and StrategyFinancial Disclosures
ARMOUR Residential REIT Updates on Financial Position
Neutral
Feb 12, 2025

On February 12, 2025, ARMOUR Residential REIT, Inc. released a presentation updating stakeholders on its financial position and operations. The presentation highlighted key financial metrics, including a common stock price of $18.82, a debt-equity ratio of 6.7, and total liquidity of $760.4 million. ARMOUR’s portfolio, valued at $14.429 billion, is significantly invested in 30-year fixed-rate pools. The company declared a March 2025 common dividend of $0.24, with a pay date of March 27, 2025, reflecting its focus on stable dividend payouts. These updates provide insights into ARMOUR’s operational strategies and its positioning within the mortgage-backed securities market.

Financial Disclosures
ARMOUR Residential REIT to Host Q4 2024 Webcast
Neutral
Feb 11, 2025

On February 11, 2025, ARMOUR Residential REIT announced it will host a real-time webcast for equity analysts to discuss its fourth quarter 2024 operating results on February 13, 2025. The earnings release for this period will be issued after trading closes on February 12, 2025, with the webcast available online and for replay on the company’s website for one year.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Apr 29, 2025