Lument Finance Trust (LFT) AI Stock Analysis

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Lument Finance Trust

(NYSE:LFT)

69Neutral

Lument Finance Trust's overall score of 69 reflects a balanced outlook. The company shows strength in its balance sheet and cash management, and its valuation is attractive with a low P/E ratio and high dividend yield. However, income volatility and market challenges, such as high interest rates and loan downgrades, present risks. The technical analysis supports a positive trend, though caution is advised due to potential overbought signals.

Positive Factors

Earnings Performance

Distributable EPS of $0.10 was reported, surpassing both consensus and lower estimates.

Portfolio Management

Lument Finance Trust continues to manage its existing multifamily-focused portfolio, and the company has not needed to modify loans like many larger peers, which highlights the strength of the affordable housing sector.

Shareholder Yield

LFT shareholders received a total 2024 yield of 17.2% based on the YE23 closing price of $2.33 per share.

Negative Factors

Interest Rate Pressure

Elevated interest rates continue to pressure borrowers and 5-rated loans ticked up in the fourth quarter with four new loans assigned a 5-rating.

Market Liquidity

The company’s micro-capitalization and limited trading liquidity may currently constrain LFT’s investor audience.

Market Stress

Even some multifamily markets are starting to see signs of stress, driven mostly by higher interest rates.

Lument Finance Trust (LFT) vs. S&P 500 (SPY)

Market Cap

$140.19M

Dividend Yield11.94%

Average Volume (3M)139.68K

Price to Earnings (P/E)7.8

Beta (1Y)0.46

Revenue Growth11.76%

EPS Growth19.50%

CountryUS

Employees600

SectorReal Estate

Sector Strength77

IndustryREIT - Mortgage

Share Statistics

EPS (TTM)0.34

Shares Outstanding52,309,208

10 Day Avg. Volume129,756

30 Day Avg. Volume139,678

Financial Highlights & Ratios

PEG Ratio0.40

Price to Book (P/B)N/A

Price to Sales (P/S)4.27

Price to Cash Flow (P/CF)5.90

P/FCF Ratio4.70

Enterprise Value/Market Cap7.11

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit28.59

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$3.25

Price Target Upside21.27% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering2

Lument Finance Trust Business Overview & Revenue Model

Company DescriptionLument Finance Trust, Inc., a real estate investment trust, focuses on investing in, financing, and managing a portfolio of commercial real estate (CRE) debt investments in the United States. The company primarily invests in transitional floating rate commercial mortgage loans on middle market multi-family assets; and other CRE -related investments, including mezzanine loans, preferred equity, commercial mortgage-backed securities, fixed rate loans, construction loans, and other CRE debt instruments. Lument Finance Trust, Inc. is qualified as a real estate investment trust (REIT) under the Internal Revenue Code of 1986. As a REIT, it would not be subject to federal income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Hunt Companies Finance Trust, Inc. and changed its name to Lument Finance Trust, Inc. in December 2020. Lument Finance Trust, Inc. was incorporated in 2012 and is headquartered in New York, New York.

How the Company Makes MoneyLument Finance Trust generates revenue primarily through the interest income earned on its portfolio of commercial real estate debt investments. The company invests in a variety of commercial mortgage loans and securities, earning interest payments over time. Additionally, LFT may engage in securitization transactions, whereby it packages its loan assets into securities and sells them to investors, potentially earning gains on these sales. The company also benefits from strategic partnerships with financial institutions and real estate operators that help source attractive investment opportunities and enhance portfolio returns. LFT's earnings are influenced by factors such as interest rate fluctuations, credit risk management, and the overall performance of the commercial real estate market.

Lument Finance Trust Financial Statement Overview

Summary

Lument Finance Trust faces challenges with revenue and profit consistency, reflected in a volatile income statement score of 45. However, a strong balance sheet with no debt and stable equity, scoring 60, alongside healthy cash flow management, scoring 70, highlight improved financial health. Overall, their financial performance is mixed, with strengths in balance sheet and cash flow offset by income volatility.

Income Statement

Neutral

Lument Finance Trust has shown fluctuating revenue trends with a notable decline to zero revenue in the most recent year. The gross profit margin has been volatile, and the net income has varied, reflecting inconsistent profit margins. The revenue growth has been unstable, which poses a challenge for sustainable income performance.

Balance Sheet

Neutral

The company exhibits a strong equity position with no total debt reported for the latest period, significantly improving the debt-to-equity ratio. The equity ratio indicates a stable financial structure, although past liabilities were high relative to equity. This suggests improved financial health and reduced leverage risk.

Cash Flow

Positive

Lument Finance Trust has demonstrated healthy free cash flow growth and a strong operating cash flow to net income ratio. The positive cash flow metrics indicate good cash management, although the recent investment cash flow fluctuations suggest potential volatility in future free cash flow.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
34.86M	32.08M	24.22M	21.07M	19.14M
	Gross Profit
34.86M	32.08M	23.91M	20.79M	-1.47B
	EBIT
30.46M	21.98M	5.11M	10.61M	7.97M
	EBITDA
0.00	94.52M	5.17M	10.61M	7.97M
	Net Income Common Stockholders
17.91M	19.71M	9.86M	10.53M	8.45M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
69.17M	51.25M	1.12B	14.75M	11.38M
	Total Assets
1.13B	1.45B	1.13B	1.05B	621.49M
	Total Debt
875.86M	1.19B	876.28M	873.63M	502.62M
	Net Debt
806.69M	1.14B	832.42M	858.88M	491.24M
	Total Liabilities
890.70M	1.21B	884.96M	879.55M	507.79M
	Stockholders Equity
237.80M	240.69M	242.90M	169.28M	113.60M
Cash Flow		Free Cash Flow
27.13M	24.74M	16.29M	13.85M	12.22M
	Operating Cash Flow
27.13M	24.74M	16.29M	13.85M	12.22M
	Investing Cash Flow
334.09M	-316.72M	-51.83M	-477.29M	87.92M
	Financing Cash Flow
-341.17M	296.13M	64.63M	412.35M	-46.77M

Lument Finance Trust Technical Analysis

Technical Analysis Sentiment

Positive

Last Price2.68

Price Trends

50DMA

2.62

Positive

100DMA

2.55

Positive

200DMA

2.40

Positive

Market Momentum

MACD

<0.01

Negative

RSI

57.62

Neutral

STOCH

83.20

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LFT, the sentiment is Positive. The current price of 2.68 is above the 20-day moving average (MA) of 2.55, above the 50-day MA of 2.62, and above the 200-day MA of 2.40, indicating a bullish trend. The MACD of <0.01 indicates Negative momentum. The RSI at 57.62 is Neutral, neither overbought nor oversold. The STOCH value of 83.20 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LFT.

Lument Finance Trust Risk Analysis

Lument Finance Trust disclosed 102 risk factors in its most recent earnings report. Lument Finance Trust 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

Lument Finance Trust Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LFT	69 Neutral	$140.19M	7.82	9.47%	11.94%	11.76%	19.50%
SEVN	68 Neutral	$166.17M	9.30	6.53%	12.56%	-6.56%	-31.89%
MITT	68 Neutral	$172.02M	4.70	10.40%	12.20%	50.41%	-21.02%
ACR	61 Neutral	$131.00M	15.22	6.75%	―	-10.14%	235.54%
Sector *	59 Neutral	$2.72B	11.58	0.09%	8782.99%	5.32%	-16.79%
EARN	52 Neutral	$211.08M	20.12	3.99%	17.08%	440.31%	21.03%
CHMI	44 Neutral	$87.32M	39.68	4.93%	22.14%	18.47%	―

* Real Estate Sector Average

Performance Comparison

LFT

Lument Finance Trust

2.68

0.70

35.35%

ACR

ACRES Commercial Realty

18.58

4.75

34.35%

SEVN

Seven Hills Realty Trust

11.15

0.18

1.64%

MITT

AG Mortgage

6.31

1.24

24.46%

EARN

Ellington Residential Mortgage

5.62

-0.24

-4.10%

CHMI

Cherry Hill Mortgage

2.71

-0.18

-6.23%

Lument Finance Trust Earnings Call Summary

Earnings Call Date:Mar 19, 2025

(Q4-2024)

% Change Since: -1.11%|

Next Earnings Date:May 12, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted stable credit risk ratings and successful loan payoffs, showing some positive momentum in lending activity and a strong focus on multi-family assets. However, challenges persist with elevated interest rates and the downgrade of some loans to high risk, alongside limited new investment activity. The sentiment is thus balanced.

Q4-2024 Updates

Positive Updates

Stable Credit Risk Ratings

The credit risk ratings have remained largely stable, reflecting disciplined underwriting and ongoing borrower engagement. The company has managed to keep a stable credit risk rating while making modest increases to specific reserves.

Successful Loan Payoffs

During the fourth quarter, Lument Finance Trust experienced $144 million of loan payoffs and acquired one new loan asset. The company received full recovery of principal on two loans that were previously rated as high risk.

Positive Momentum in Lending Activity

The company is optimistic about the positive momentum for lending activity continuing into 2025, with increasing stability in commercial real estate and rental growth anticipated.

Strong Focus on Multi-Family Assets

Lument Finance Trust continues to focus on multi-family assets, which remain strong due to robust demand, constrained supply, and resilient rental trends.

Negative Updates

Interest Rate Environment Challenges

The anticipated rate cuts did not materialize as expected due to ongoing inflationary pressures, leading to elevated interest rates which present challenges.

Downgrade of Loans to High Risk

The company had six loans downgraded to a risk rating of five, with an aggregate principal amount of $98 million, indicating potential challenges.

Limited New Investment Activity

LFT's investment activity during the quarter was modest, primarily limited by the available reinvestment capital, and the new loan acquisitions were minimal.

Company Guidance

During the fourth quarter of fiscal year 2024, Lument Finance Trust reported a GAAP net income of $0.07 per share and distributable earnings of $0.10 per share. Over the fiscal year, the company declared cumulative dividends of $0.40 per share, which included a $0.09 special dividend. The company’s portfolio consisted of 65 floating rate loans totaling approximately $1.1 billion, with an average rate of SOFR plus 358 basis points. The portfolio's financing was supported by securitizations with effective leverage of 78% and a weighted average cost of SOFR plus 226 basis points. Despite market volatility and elevated interest rates, the company remains optimistic about the increasing stability in commercial real estate and expects lending activity to continue its positive momentum into 2025. The Federal Reserve is projected to make two rate cuts in 2025, which may further impact the economic landscape. The company also indicated that its credit risk ratings have remained stable, though it has modestly increased specific reserves in line with expectations for portfolio performance.

Lument Finance Trust Corporate Events

Executive/Board ChangesDividendsFinancial Disclosures

Lument Finance Trust Announces Q4 2024 Results and Leadership Change

Neutral

Mar 19, 2025

On March 19, 2024, Lument Finance Trust announced its financial results for the fourth quarter and full year 2024, reporting a GAAP net income of $3.6 million for the fourth quarter and $17.9 million for the full year. The company declared a cash dividend of $0.08 per share for common stock and $0.4921875 per share for preferred stock, payable in April 2025. Additionally, the Board appointed Greg D. Calvert as the new President, effective May 1, 2025, following the resignation of James J. Henson. These announcements reflect LFT’s ongoing commitment to shareholder returns and leadership transition, potentially impacting its strategic direction and market positioning.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.