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MFA Financial (MFA)
NYSE:MFA
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MFA Financial
(NYSE:MFA)60Neutral
Positive Factors
Debt Management
MFA Financial completed multiple securitizations, bringing its total securitized debt to approximately $5.0 billion, reflecting effective debt management.
Financial Performance
The company reported strong second-quarter distributable earnings per share (EPS) of $0.44, which is higher than the previous quarter and Street consensus.
Negative Factors
Stock Valuation
MFA shares are trading at a steep discount to current GAAP BVPS and economic BVPS.
MFA Financial (MFA) vs. S&P 500 (SPY)
Market Cap
$1.08B
Dividend Yield13.3%
Average Volume (3M)1.06M
Price to Earnings (P/E)12.9
Beta (1Y)1.31
Revenue Growth26.34%
EPS Growth79.07%
CountryUS
Employees377
SectorReal Estate
Sector Strength72
IndustryREITs
Share Statistics
EPS (TTM)0.81
Shares Outstanding102,523,820
10 Day Avg. Volume1,217,486
30 Day Avg. Volume1,061,867
Financial Highlights & Ratios
PEG Ratio0.16
Price to Book (P/B)N/A
Price to Sales (P/S)3.01
Price to Cash Flow (P/CF)2.40
P/FCF Ratio1.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$12.35Price Target Upside16.18% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
MFA Financial Business Overview & Revenue Model
Company DescriptionMFA Financial, Inc. operates as a real estate investment trust, which engages in the business of investment, on a leveraged basis, in residential mortgage assets including agency mortgage-backed securities, non-agency mortgage-backed securities, and residential whole loans. The company was founded by Stewart Zimmerman on July 24, 1997 and is headquartered in New York, NY.
How the Company Makes MoneyMFA Financial makes money by investing in residential mortgage assets and earning income from these investments. The company's revenue model centers around acquiring and managing a portfolio of residential whole loans and mortgage-backed securities, which generate interest income. MFA leverages its expertise in managing mortgage credit risk to maximize returns. The company also benefits from the capital appreciation of its real estate assets. Additionally, MFA Financial engages in securitization and other financial transactions to enhance its liquidity and financial performance. Key revenue streams include interest income from mortgage investments, gains from the sale of mortgage-backed securities, and income generated from securitization activities. Significant partnerships with financial institutions and access to capital markets further contribute to its earnings and operational efficiency.
MFA Financial Financial Statement Overview
Summary
MFA Financial demonstrates a mixed financial performance with strengths in improving net income and a solid balance sheet with reduced leverage. The absence of revenue in 2024 and fluctuating cash flows point to potential operational and strategic adjustments. While the company has managed to stabilize its equity position and cash flows, the lack of revenue growth and operational metrics in the latest period raises concerns about future profitability.Income Statement
The income statement reveals fluctuating revenues and profitability. Total revenue has been inconsistent, with a significant decline in 2024 to zero, probably due to accounting adjustments or extraordinary items. The net income has shown improvement, turning positive in recent years after a substantial loss in 2020. However, the absence of EBIT and EBITDA metrics in 2024 makes it challenging to assess operational efficiency.45
Neutral
Balance Sheet
The balance sheet highlights a strong equity position relative to liabilities, with stockholders' equity remaining stable. The debt-to-equity ratio has improved significantly as total debt was eliminated by 2024, contributing to a safer financial structure. The equity ratio is moderate, reflecting a balanced capital structure. However, a decline in total assets suggests potential downsizing or asset divestitures.60
Neutral
Cash Flow
Cash flow analysis shows positive free cash flow and operating cash flow over the years, indicating good liquidity. The operating cash flow to net income ratio is robust, suggesting efficient cash generation relative to earnings. However, cash flow from investing activities has been negative, likely due to strategic reinvestments or asset sales.55
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 252.85M | 234.05M | 195.85M | 337.22M | -555.87M | Gross Profit |
| 252.85M | 199.91M | 143.76M | 299.75M | -1.11B | EBIT |
| -144.10M | 69.16M | -252.34M | 328.87M | -679.39M | EBITDA |
| 0.00 | 0.00 | 0.00 | 433.02M | -679.39M | Net Income Common Stockholders |
| 119.25M | 80.16M | -247.34M | 328.87M | -679.39M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 338.93M | 318.00M | 334.18M | 304.70M | 814.35M | Total Assets |
| 11.41B | 10.77B | 9.11B | 9.14B | 6.93B | Total Debt |
| 6.02B | 5.00B | 3.63B | 2.92B | 1.84B | Net Debt |
| 5.68B | 4.69B | 3.30B | 2.62B | 1.03B | Total Liabilities |
| 9.57B | 8.87B | 7.12B | 6.60B | 4.41B | Stockholders Equity |
| 1.84B | 1.90B | 1.99B | 2.54B | 2.52B |
| Cash Flow | Free Cash Flow | |||
| 200.12M | 108.74M | 365.78M | 108.25M | 33.53M | Operating Cash Flow |
| 200.12M | 108.74M | 366.08M | 120.29M | 38.40M | Investing Cash Flow |
| -424.60M | -1.55B | -1.13B | -2.17B | 6.38B | Financing Cash Flow |
| 337.58M | 1.43B | 850.21M | 1.63B | -5.74B |
MFA Financial Technical Analysis
Positive
10.63
Price Trends
10.29
Positive
10.73
Negative
10.73
Negative
Market Momentum
0.05
Negative
55.83
Neutral
69.86
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MFA, the sentiment is Positive. The current price of 10.63 is above the 20-day moving average (MA) of 10.55, above the 50-day MA of 10.29, and below the 200-day MA of 10.73, indicating a neutral trend. The MACD of 0.05 indicates Negative momentum. The RSI at 55.83 is Neutral, neither overbought nor oversold. The STOCH value of 69.86 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MFA.
MFA Financial Risk Analysis
MFA Financial disclosed 66 risk factors in its most recent earnings report. MFA Financial 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
MFA Financial Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | $9.36B | 10.99 | 9.58% | 14.09% | 384.69% | 963700.00% | |
68 Neutral | $12.38B | 13.21 | 8.40% | 12.14% | 13.33% | ― | |
62 Neutral | $1.44B | 5.82 | 13.74% | 13.04% | 28.33% | ― | |
61 Neutral | $4.91B | 18.99 | -3.12% | 7.77% | 6.71% | -19.69% | |
60 Neutral | $1.08B | 12.88 | 6.35% | 13.30% | 26.34% | 79.07% | |
58 Neutral | $527.79M | 13.23 | 8.19% | 18.71% | 137.36% | ― | |
52 Neutral | $1.42B | 8.01 | -1.09% | 15.53% | -46.65% | 76.86% |
* Real Estate Sector Average
Performance Comparison
MFA
MFA Financial
10.63
0.84
8.58%
AGNC
AGNC Investment
10.29
2.02
24.43%
NLY
Annaly Capital
21.69
4.71
27.74%
ARR
ARMOUR Residential REIT
18.69
2.03
12.18%
IVR
Invesco Mortgage
8.61
1.10
14.65%
TWO
Two Harbors
13.93
2.79
25.04%
MFA Financial Earnings Call Summary
Earnings Call Date: Feb 19, 2025 | % Change Since: 3.20% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed view with notable achievements like asset growth and successful securitizations. However, challenges such as economic book value decline, increased delinquencies, and negatively impacted earnings highlight areas of concern. While the company maintained a stable dividend and delivered a positive economic return for the year, the immediate financial results reflect some pressure from the economic environment and operational challenges.Highlights
Asset Growth
MFA Financial grew its assets from $10.8 billion to $11.4 billion in 2024, including an increase in the agency book by over $800 million, ending the year at $1.4 billion.
Successful Securitizations
Executed three securitizations in Q4 on over a billion dollars of loans, including RTL, Non-QM, and NPL loans. Over three-quarters of the loan portfolio is financed through securitization.
Positive Economic Return for 2024
MFA delivered a total economic return of positive 5.2% for the year 2024.
Dividend Stability
MFA paid $1.40 in common dividends in 2024, consistent with 2023, with approximately 40% treated as a non-taxable return of capital.
Agency MBS Portfolio Growth
The agency MBS portfolio grew by almost 50% to $1.4 billion by year-end, with hedge returns in the mid-teens.
Lowlights
Economic Book Value Decline
Economic book value decreased by approximately 3.7% from $14.46 at the end of September to $13.93 per share at the end of December.
Increased Delinquencies
Sixty-plus day delinquencies for the entire portfolio rose to 7.5% from 6.7% a quarter ago. Delinquencies increased particularly in single-family and multifamily transitional loans.
Negatively Impacted GAAP Earnings
GAAP earnings were negatively impacted by higher rates across the yield curve, resulting in a loss of $0.02 per basic common share for the fourth quarter.
Challenges in Loan Origination
Lima One originated $1.4 billion in business purpose loans in 2024, lower than expectations, with origination not as high as desired.
Company Guidance
During the MFA Financial Fourth Quarter 2024 Earnings Conference Call, the company provided detailed guidance on its financial performance and strategic initiatives. The company experienced a modest decline in economic book value by roughly 3.7%, ending the quarter at $13.93 per share, compared to $14.46 at the end of September. Despite a total economic return of negative 1.2% for the quarter, MFA achieved a positive 5.2% return for the year. In terms of asset growth, MFA increased its assets from $10.8 billion to $11.4 billion in 2024, with a notable rise in agency book value by over $800 million. The company executed three securitizations totaling over $1 billion, maintaining recourse leverage at 1.7 times. Moreover, MFA paid common dividends of $1.40 per share for 2024, with favorable tax treatment classifying 40% of these dividends as a non-taxable return of capital. The guidance also highlighted a strategic shift towards non-QM loans and agency securities, with a focus on maintaining liquidity and enhancing portfolio returns amid a challenging market environment.MFA Financial Corporate Events
Executive/Board Changes
MFA Financial Appoints Christopher Small to Board
Neutral
Mar 4, 2025
On March 4, 2025, MFA Financial, Inc. announced the election of Christopher Small to its Board of Directors, filling the vacancy left by the passing of Francis J. Oelerich III in December 2024. Mr. Small, with extensive experience in investment banking and capital markets, will also serve on the Audit and Compensation Committees, bringing valuable expertise to MFA’s Board, management team, and stockholders.
Executive/Board ChangesPrivate Placements and FinancingBusiness Operations and StrategyFinancial Disclosures
MFA Financial Reports 2024 Year-End Financial Results
Positive
Feb 19, 2025
MFA Financial, Inc. announced its financial results for the fourth quarter and full year of 2024, revealing a GAAP net income to common stockholders of $86.4 million for the year, up from $47.3 million in 2023. Despite a challenging fourth quarter with a total economic return of -1.2%, the company leveraged market conditions to acquire $1.2 billion in loans and securities, positioning itself for future growth. Key activities in 2024 included the acquisition of $2.6 billion in loans, eight loan securitizations, and expanding its Agency MBS portfolio to $1.4 billion. The company also navigated leadership changes and issued $190 million of senior unsecured notes, enhancing its strategic positioning for 2025.
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.