Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 stocks made the list for top value stocks in the Mortgage Real Estate Investment Trusts (REITs) industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.
Why Focus on Undervalued Mortgage Real Estate Investment Trusts (REITs) Stocks?
Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.
AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.
What Goes Into AAII’s Value Grade?
Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.
AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.
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6 Undervalued Mortgage Real Estate Investment Trusts (REITs) Stocks
Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Mortgage Real Estate Investment Trusts (REITs) industry for Friday, October 04, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Mortgage Real Estate Investment Trusts (REITs) industry median.
| Company | Ticker | Price/Sales | Price/Earnings | EV/EBITDA | Shareholder Yield | Price/Book Value | Price/Free Cash Flow | Value Grade |
| ACRES Commercial Realty Corp. | ACR | 1.66 | 19.2 | na | 9.3% | 0.27 | 10.6 | A |
| Angel Oak Mortgage REIT, Inc. | AOMR | 3.66 | 5.2 | na | 12.0% | 0.99 | na | A |
| Claros Mortgage Trust, Inc. | CMTG | 26.93 | na | na | 5.3% | 0.42 | na | B |
| MFA Financial, Inc. | MFA | 4.81 | 19.3 | na | 10.3% | 0.66 | na | B |
| Annaly Capital Management, Inc. | NLY | na | na | na | 11.8% | 0.87 | 3.3 | A |
| Chicago Atlantic Real Estate Finance, Inc. | REFI | 5.22 | 7.8 | na | 5.1% | 1.10 | na | B |
The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.
The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)
Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).
As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.
ACRES Commercial Realty Corp.’s Value Grade
Value Grade:
| Metric | Score | ACR | Industry Median |
| Price/Sales | 46 | 1.66 | 4.86 |
| Price/Earnings | 50 | 19.2 | 14.3 |
| EV/EBITDA | na | na | 21.7 |
| Shareholder Yield | 5 | 9.3% | 8.3% |
| Price/Book Value | 7 | 0.27 | 0.63 |
| Price/Free Cash Flow | 26 | 10.6 | 32.2 |
ACRES Commercial Realty Corp., a real estate investment trust (REIT), focuses on the origination, holding, and management of commercial real estate mortgage loans and equity investments in commercial real estate property in the United States. It invests in commercial real estate-related assets, including floating-rate first mortgage loans, first priority interests in first mortgage loans, subordinated interests in first mortgage loans, mezzanine financing, preferred equity investments, and commercial mortgage-backed securities. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Exantas Capital Corp. and changed its name to ACRES Commercial Realty Corp. in February 2021. ACRES Commercial Realty Corp. was incorporated in 2005 and is based in Uniondale, New York.
Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.
ACRES Commercial Realty Corp. has a Value Score of 89, which is considered to be undervalued.
When you look at ACRES Commercial Realty Corp.’s price-to-sales ratio at 1.66 compared to the industry median at 4.86, this company has a lower price relative to revenue compared to its peers. This could make ACRES Commercial Realty Corp.’s stock more attractive for value investors.
ACRES Commercial Realty Corp.’s price-earnings ratio is 19.20 compared to the industry median at 14.30. This means it has a higher share price relative to earnings compared to its peers. This could make ACRES Commercial Realty Corp. less attractive for value investors.
Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. ACRES Commercial Realty Corp.’s shareholder yield is higher than its industry median ratio of 8.25%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.
As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. ACRES Commercial Realty Corp.’s price-to-book ratio is lower than its industry median ratio of 0.63. This could make ACRES Commercial Realty Corp. more attractive to investors looking for a new addition to their portfolio.
Lastly, let’s take a look at ACRES Commercial Realty Corp.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. ACRES Commercial Realty Corp.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 32.20. This could make ACRES Commercial Realty Corp. more attractive because the lower P/FCF ratio indicates that ACRES Commercial Realty Corp. is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.
Angel Oak Mortgage REIT, Inc.’s Value Grade
Value Grade:
| Metric | Score | AOMR | Industry Median |
| Price/Sales | 72 | 3.66 | 4.86 |
| Price/Earnings | 4 | 5.2 | 14.3 |
| EV/EBITDA | na | na | 21.7 |
| Shareholder Yield | 3 | 12.0% | 8.3% |
| Price/Book Value | 32 | 0.99 | 0.63 |
| Price/Free Cash Flow | na | na | 32.2 |
Angel Oak Mortgage REIT, Inc., a real estate finance company, focuses on acquiring and investing in first lien non- qualified mortgage loans and other mortgage-related assets in the United States mortgage market. It offers investment securities; residential mortgage loans; and commercial mortgage loans. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was incorporated in 2018 and is headquartered in Atlanta, Georgia.
Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.
Angel Oak Mortgage REIT, Inc. has a Value Score of 87, which is considered to be undervalued.
Angel Oak Mortgage REIT, Inc.’s price-earnings ratio is 5.2 compared to the industry median at 14.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Angel Oak Mortgage REIT, Inc. more attractive for value investors.
Angel Oak Mortgage REIT, Inc.’s price-to-book ratio is lower than its peers. This could make Angel Oak Mortgage REIT, Inc. more attractive for value investors when compared to the industry median at 0.63.
You can read more about Angel Oak Mortgage REIT, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.
Claros Mortgage Trust, Inc.’s Value Grade
Value Grade:
| Metric | Score | CMTG | Industry Median |
| Price/Sales | 96 | 26.93 | 4.86 |
| Price/Earnings | na | na | 14.3 |
| EV/EBITDA | na | na | 21.7 |
| Shareholder Yield | 14 | 5.3% | 8.3% |
| Price/Book Value | 11 | 0.42 | 0.63 |
| Price/Free Cash Flow | na | na | 32.2 |
Claros Mortgage Trust, Inc. operates as a real estate investment trust. It focuses on originating senior and subordinate loans on transitional commercial real estate assets in the United States. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. The company was incorporated in 2015 and is headquartered in New York, New York.
Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.
Claros Mortgage Trust, Inc. has a Value Score of 63, which is considered to be undervalued.
Claros Mortgage Trust, Inc.’s price-to-book ratio is higher than its peers. This could make Claros Mortgage Trust, Inc. less attractive for value investors when compared to the industry median at 0.63.
You can read more about Claros Mortgage Trust, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.
MFA Financial, Inc.’s Value Grade
Value Grade:
| Metric | Score | MFA | Industry Median |
| Price/Sales | 79 | 4.81 | 4.86 |
| Price/Earnings | 50 | 19.3 | 14.3 |
| EV/EBITDA | na | na | 21.7 |
| Shareholder Yield | 4 | 10.3% | 8.3% |
| Price/Book Value | 19 | 0.66 | 0.63 |
| Price/Free Cash Flow | na | na | 32.2 |
MFA Financial, Inc., together with its subsidiaries, operates as a real estate investment trust in the United States. It invests in residential mortgage securities, including non-agency mortgage-backed securities, agency MBS, and credit risk transfer securities; residential whole loans, including purchased performing loans, purchased credit deteriorated, and non-performing loans; and mortgage servicing rights related assets. The company was incorporated in 1997 and is based in New York, New York.
Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.
MFA Financial, Inc. has a Value Score of 68, which is considered to be undervalued.
MFA Financial, Inc.’s price-earnings ratio is 19.3 compared to the industry median at 14.3. This means that it has a higher price relative to its earnings compared to its peers. This makes MFA Financial, Inc. less attractive for value investors.
MFA Financial, Inc.’s price-to-book ratio is lower than its peers. This could make MFA Financial, Inc. more attractive for value investors when compared to the industry median at 0.63.
You can read more about MFA Financial, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.
Annaly Capital Management, Inc.’s Value Grade
Value Grade:
| Metric | Score | NLY | Industry Median |
| Price/Sales | na | na | 4.86 |
| Price/Earnings | na | na | 14.3 |
| EV/EBITDA | na | na | 21.7 |
| Shareholder Yield | 3 | 11.8% | 8.3% |
| Price/Book Value | 27 | 0.87 | 0.63 |
| Price/Free Cash Flow | 7 | 3.3 | 32.2 |
Annaly Capital Management, Inc., a diversified capital manager, engages in mortgage finance. The company invests in agency mortgage-backed securities collateralized by residential mortgages; non-agency residential whole loans and securitized products within the residential and commercial markets; mortgage servicing rights; agency commercial mortgage-backed securities; to-be-announced forward contracts; residential mortgage loans; and agency or private label credit risk transfer securities. It has elected to be taxed as a real estate investment trust (REIT). As a REIT, it is not subject to federal income tax to the extent that it distributes its taxable income to its shareholders. The company was incorporated in 1996 and is based in New York, New York.
Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.
Annaly Capital Management, Inc. has a Value Score of 99, which is considered to be undervalued.
Annaly Capital Management, Inc.’s price-to-book ratio is lower than its peers. This could make Annaly Capital Management, Inc. more attractive for value investors when compared to the industry median at 0.63.
You can read more about Annaly Capital Management, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.
Chicago Atlantic Real Estate Finance, Inc.’s Value Grade
Value Grade:
| Metric | Score | REFI | Industry Median |
| Price/Sales | 81 | 5.22 | 4.86 |
| Price/Earnings | 11 | 7.8 | 14.3 |
| EV/EBITDA | na | na | 21.7 |
| Shareholder Yield | 15 | 5.1% | 8.3% |
| Price/Book Value | 36 | 1.10 | 0.63 |
| Price/Free Cash Flow | na | na | 32.2 |
Chicago Atlantic Real Estate Finance, Inc. operates as a commercial real estate finance company in the United States. The company engages in originating, structuring, and investing in first mortgage loans and alternative structured financings secured by commercial real estate properties. Its portfolio primarily includes offers senior loans to state-licensed operators in the cannabis industry. The company has elected to be taxed as a real estate investment trust (REIT) and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. Chicago Atlantic Real Estate Finance, Inc. was incorporated in 2021 and is headquartered in Chicago, Illinois.
Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.
Chicago Atlantic Real Estate Finance, Inc. has a Value Score of 72, which is considered to be undervalued.
Chicago Atlantic Real Estate Finance, Inc.’s price-earnings ratio is 7.8 compared to the industry median at 14.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Chicago Atlantic Real Estate Finance, Inc. more attractive for value investors.
Chicago Atlantic Real Estate Finance, Inc.’s price-to-book ratio is lower than its peers. This could make Chicago Atlantic Real Estate Finance, Inc. more attractive for value investors when compared to the industry median at 0.63.
You can read more about Chicago Atlantic Real Estate Finance, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.
Other Mortgage Real Estate Investment Trusts (REITs) Stock Grades
Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.
Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Mortgage Real Estate Investment Trusts (REITs) stocks as well as other industrys.
Choosing Which of the 6 Best Mortgage Real Estate Investment Trusts (REITs) Stocks Is Right for You
Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.
- ACRES Commercial Realty Corp. stock has a Value Grade of A.
- Angel Oak Mortgage REIT, Inc. stock has a Value Grade of A.
- Claros Mortgage Trust, Inc. stock has a Value Grade of B.
- MFA Financial, Inc. stock has a Value Grade of B.
- Annaly Capital Management, Inc. stock has a Value Grade of A.
- Chicago Atlantic Real Estate Finance, Inc. stock has a Value Grade of B.
Now that you have a bit more background about each of the 6 undervalued stocks in the Mortgage Real Estate Investment Trusts (REITs) industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.
We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.
A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.
Additional Resources About Mortgage Real Estate Investment Trusts (REITs) Stocks
Want to learn more about Mortgage Real Estate Investment Trusts (REITs) stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.
- 6 Undervalued Mortgage Real Estate Investment Trusts (REITs) Stocks for Friday, October 04
- 6 Undervalued Mortgage Real Estate Investment Trusts (REITs) Stocks for Thursday, October 03
- 5 Undervalued REITs - Specialized Stocks for Tuesday, October 01
- 4 Undervalued REITs - Specialized Stocks for Monday, September 30
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