Lument Finance Trust (LFT) AI Stock Analysis

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Lument Finance Trust

(NYSE:LFT)

Rating:56Neutral

Price Target:

$2.50

▲( 4.17% Upside)

Lument Finance Trust's overall stock score is impacted by weak financial performance, particularly in revenue stability, and technical analysis indicating a downward trend. However, the company's strong cash flow management, improved balance sheet, and high dividend yield offer a silver lining. The valuation remains relatively attractive, suggesting potential for income-focused investors despite challenges in earnings and credit loss management.

Positive Factors

Dividend Coverage

Distributable earnings covered the $0.08 quarterly dividend, with a strong coverage ratio of 125%.

Earnings Stability

Lument Finance Trust has stabilized earnings by replacing portfolio run-off with additional multifamily bridge loans acquired from its manager.

Portfolio Management

Lument Finance Trust continues to manage its existing multifamily-focused portfolio without needing to modify loans, highlighting the strength of the affordable housing sector.

Negative Factors

Interest Rate Impact

Elevated interest rates continue to pressure borrowers, leading to an increase in 5-rated loans in the fourth quarter.

Market Constraints

The company's micro-capitalization and limited trading liquidity may constrain Lument Finance Trust's investor audience.

Market Stress

Some multifamily markets are beginning to show signs of stress, primarily driven by higher interest rates.

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

Market Cap

$127.67M

Dividend Yield13.33%

Average Volume (3M)115.56K

Price to Earnings (P/E)12.3

Beta (1Y)0.34

Revenue Growth-10.98%

EPS Growth-35.75%

CountryUS

Employees600

SectorReal Estate

Sector Strength64

IndustryREIT - Mortgage

Share Statistics

EPS (TTM)0.08

Shares Outstanding52,324,470

10 Day Avg. Volume139,050

30 Day Avg. Volume115,555

Financial Highlights & Ratios

PEG Ratio-0.24

Price to Book (P/B)0.56

Price to Sales (P/S)0.00

P/FCF Ratio5.83

Enterprise Value/Market Cap0.54

Enterprise Value/Revenue0.34

Enterprise Value/Gross Profit2.12

Enterprise Value/Ebitda0.76

Forecast

1Y Price Target

$3.25

Price Target Upside35.42% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

Lument Finance Trust Business Overview & Revenue Model

Company DescriptionLument Finance Trust, Inc. (LFT) is a real estate investment trust (REIT) that primarily focuses on investing in, financing, and managing a portfolio of commercial real estate debt investments. The company operates in the real estate sector, with a specific emphasis on providing financing solutions for commercial properties. LFT's core services include originating, acquiring, and managing commercial mortgage loans, commercial mortgage-backed securities (CMBS), and other commercial real estate-related debt instruments.

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 is experiencing challenges in sustaining revenue and profit growth, with notable improvements in balance sheet stability due to reduced leverage. While cash flow metrics are strong, the volatility in income and investment cash flows may impact future performance. The company should focus on stabilizing its revenue streams to enhance overall financial health.

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.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
46.78M	34.86M	32.08M	24.22M	21.07M	19.14M
	Gross Profit
32.20M	34.86M	32.08M	23.91M	20.79M	-1.47B
	EBIT
-491.50K	0.00	21.98M	5.11M	10.61M	7.97M
	EBITDA
14.37M	0.00	94.52M	5.17M	10.61M	7.97M
	Net Income Common Stockholders
15.15M	22.65M	19.71M	9.86M	10.53M	8.45M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
63.52M	0.00	51.25M	1.12B	14.75M	11.38M
	Total Assets
1.06B	1.13B	1.45B	1.13B	1.05B	621.49M
	Total Debt
0.00	875.86M	1.19B	876.28M	873.63M	502.62M
	Net Debt
-63.52M	806.69M	1.14B	832.42M	858.88M	491.24M
	Total Liabilities
829.47M	890.70M	1.21B	884.96M	879.55M	507.79M
	Stockholders Equity
231.95M	237.80M	240.69M	242.90M	169.28M	113.60M
Cash Flow		Free Cash Flow
22.17M	27.13M	24.74M	16.29M	13.85M	12.22M
	Operating Cash Flow
22.17M	27.13M	24.74M	16.29M	13.85M	12.22M
	Investing Cash Flow
309.29M	334.09M	-316.72M	-51.83M	-477.29M	87.92M
	Financing Cash Flow
-331.58M	-341.17M	296.13M	64.63M	412.35M	-46.77M

Lument Finance Trust Technical Analysis

Technical Analysis Sentiment

Negative

Last Price2.40

Price Trends

50DMA

2.59

Negative

100DMA

2.58

Negative

200DMA

2.43

Positive

Market Momentum

MACD

-0.04

Positive

RSI

40.88

Neutral

STOCH

27.21

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LFT, the sentiment is Negative. The current price of 2.4 is below the 20-day moving average (MA) of 2.57, below the 50-day MA of 2.59, and below the 200-day MA of 2.43, indicating a neutral trend. The MACD of -0.04 indicates Positive momentum. The RSI at 40.88 is Neutral, neither overbought nor oversold. The STOCH value of 27.21 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MITT	67 Neutral	$204.47M	7.76	8.55%	11.18%	36.70%	-48.88%
SEVN	66 Neutral	$172.46M	10.07	6.27%	11.99%	-11.97%	-27.40%
Sector *	60 Neutral	$2.76B	10.33	0.49%	8508.28%	5.95%	-17.56%
ACR	57 Neutral	$133.02M	62.16	5.47%	―	-13.68%	-53.53%
LFT	56 Neutral	$127.67M	12.26	6.38%	13.33%	-10.98%	-35.75%
EARN	52 Neutral	$209.58M	20.12	-2.82%	17.33%	440.31%	21.03%
CHMI	50 Neutral	$99.11M	43.78	-2.83%	20.13%	0.33%	-37.48%

* Real Estate Sector Average

Performance Comparison

LFT

Lument Finance Trust

2.44

0.32

15.09%

ACR

ACRES Commercial Realty

18.12

5.31

41.45%

MITT

AG Mortgage

6.86

0.88

14.72%

EARN

Ellington Residential Mortgage

5.58

-0.47

-7.77%

CHMI

Cherry Hill Mortgage

2.98

-0.09

-2.93%

SEVN

Seven Hills Realty Trust

11.57

0.37

3.30%

Lument Finance Trust Earnings Call Summary

Earnings Call Date:May 12, 2025

(Q1-2025)

% Change Since: -8.75%|

Next Earnings Date:Aug 11, 2025

Earnings Call Sentiment Neutral

The earnings call reflected a mixed sentiment with both positive and negative aspects. While there were notable achievements in terms of asset management and liquidity preservation, the quarter was marked by financial losses, increased credit loss reserves, and challenges with non-performing loans.

Q1-2025 Updates

Positive Updates

Resilience in Multifamily Sector

The multifamily sector continues to show resilience despite evolving market dynamics. Occupancy rates remain robust, and the sector benefits from limited new supply and challenges faced by potential homebuyers due to mortgage rates.

Successful Loan Modifications

The company executed several successful loan modifications and extensions, preserving value and enhancing downside protection, which contributes positively to asset management.

Liquidity Management

The company ended the first quarter with an unrestricted cash balance of $64 million, maintaining flexibility and opting for partial deleveraging of the portfolio to provide additional cushion for meeting covenants.

Positive Outcomes on Problem Loans

During the first quarter, positive outcomes were achieved on two out of the six assets that were previously rated as '5' risk-rated loans, with resolutions including loan assumptions and extensions.

Negative Updates

Net Loss and Decline in Interest Income

Reported a GAAP net loss of $0.03 per share and a decline in net interest income to $7.7 million from $9.4 million in the previous quarter.

Increase in Credit Loss Allowance

There was a $5.7 million net increase in the allowance for credit losses, with specific reserves increasing by $7.3 million for seven loans risk rated '5'.

Challenges with Non-Performing Loans

Seven loans were risk-rated '5', indicating serious performance issues, including defaults and foreclosures, representing 11% of the investment portfolio.

Reduction in Book Value

Total book value of common stock decreased from $3.40 per share to $3.29 per share, primarily due to the increase in the allowance for credit losses.

Company Guidance

During the first quarter of 2025 earnings call for Lument Finance Trust, the company reported a GAAP net loss of $0.03 per share and distributable earnings of $0.08 per share. The company declared a quarterly dividend of $0.08 per common share, consistent with the previous quarter. The net interest income for Q1 was $7.7 million, a decline from $9.4 million in Q4 of 2024, primarily due to a decrease in the SOFR benchmark rate and the deleveraging of secured financings. Exit fees amounted to $700,000, with total operating expenses including management fees remaining flat at approximately $2.6 million. The company increased its specific reserves for credit losses by $7.3 million, resulting in an $11.1 million total reserve as of March 31. The unrestricted cash balance at the end of the quarter was $64 million, with a total book value of common stock at $172 million or $3.29 per share. The portfolio included 61 floating rate loans with a weighted average note rate of SOFR plus 355 basis points, and 92% were collateralized by multifamily properties. Seven loans, totaling $108 million, were risk-rated “5,” indicating significant risk, and management continues to focus on optimizing recovery through active asset management strategies.

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.