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Proof ARMOUR Residential REIT Is A Positive Investment
- Combined stock price and dividend payouts, the stock is increased value 8.25% this year.
- Fourth quarter’s financial report should reflect similar profits, but we do not expect any catch-up dividend this year.
- 2015 will be different, and after the interest rate hikes, should be more profitable.
ARMOUR At Risk Of Losing Shareholder Interest If Strategy Not Changed
- ARMOUR’s third quarter earnings failed to meet analyst expectations.
- Management continues defensive approach in third quarter as well.
- Interest rates expected to remain stable; management needs to take advantage of low interest rates.
- End of quantitative easing program is not a concern for RMBS companies.
ARMOUR Residential REIT: Don't Be Fooled By The 15% Yield
- ARR sees both its core income and book value per share drop in Q3 2014.
- This was despite the leverage ratio ticking higher.
- ARR remains a high-risk play in an already high-risk sector.
15.1% Dividend ARMOUR Residential REIT Performed Poorly In Q3 2014
- ARMOUR Residential REIT pays a great 15.1% dividend. However, this may be in jeopardy with Core Income of only $0.13 in Q2 and Q3 2014, but dividends of $0.15 each quarter.
- ARR lost book value from $4.90 as of June 30, 2014 to $4.58 on September 30, 2014. This was -6.5% for Q3 (-26.1% annualized). It was terrible.
- Many other metrics were negative as well, such as a rise in the CPR from 5.12% to 7.46%. ARR just looked ugly.
Breaking Down The Quarterly Report Of Armour Residential REIT
- Company's own large hedge fund to offset interest rate hike dragging profitability.
- Armour reported taxable income of $49 million, $0.13 per share, for the quarter.
- Company’s $15.5 billion investment portfolio with leverage ratio at 8.42 to 1.
Update: Armour Residential REIT Reports Q3 Earnings - My Take
- Armour Residential REIT just reported Q3 earnings of $49.0 million, or $0.13 per share.
- I predicted key metric improvement, but the key metrics I follow all declined quarter-over-quarter.
- I won't let one bad quarter change my thesis, and thus I remain bullish on the stock under $4.00 per share.
Oversold, 15.4% Dividend Payer Armour Residential REIT Looks Attractive
- ARR pays a fantastic 15.4% annual dividend.
- The dividend appears to be stable, although the Core Income of $0.13 per share in Q2 did not fully cover the $0.15 dividend.
- ARR has already declared the same $0.15 per share dividend ($0.05 per month) for Q4 2014.
- Interest rates have been relatively stable for Q3 with the 10 year US Treasury Note yield ending Q2 at 2.53% and ending Q3 at 2.49% (a 4 bps difference).
- The Q2E 2014 book value of $4.90 probably decreased to roughly $4.86 per share. This is almost 25% higher than the $3.90 stock price on October 6, 2014.
- Armour Residential REIT has been under extreme selling pressure in the last month.
- I have avoided this stock for years.
- The stock has stabilized in 2014.
- Despite not covering dividends entirely in Q2, the company is maintaining its dividend through 2014 suggesting upcoming earnings will be strong.
- Read why I recommend this stock for the first time.
- Armour is seeing its core income come under pressure.
- The company failed to cover its dividend during Q2.
- At current prices, Armour yields 15% and trades at a 18% discount to book value.
ARMOUR Residential REIT's Staggering Yield May Be A Risk Worth Taking
- ARMOUR's weighted average maturity is increasing in recent quarters.
- ARR is trading substantially below its book value of $2 billion.
- ARR's dividends have gone down year after year, but are at an appealing 14.35%.
- ARMOUR has been taking the right steps by repositioning its investment portfolio and adjusting its hedge positions to protect book value.
- Core EPS will benefit in the future from ARR's measures to reposition its portfolio.
- ARR has the option to undertake share repurchases.
Continuation Of Defensive Approach In 2Q Forces Change Of Thesis On ARMOUR From Bullish To Neutral
- Core EPS pressurized by high hedging costs and lower asset yield.
- Company should give up defensive approach and take advantage of lower interest rates.
- Company offers exciting double-digit dividend yield with potential for modest price appreciation.
- The quarter was profitable and provides more opportunities in the future.
- Book value increased from $4.67 to $4.90 this quarter.
- Over 14% yield to take the cash or reinvest the dividends monthly.
14%+ Dividend Payer ARMOUR Residential REIT May Be A Bargain
- ARR grew its book value from $4.67 to $4.90 per common share in Q2 2014. This is a large discount to its stock price of $4.20 as of August 1.
- ARR pays a monthly $0.05 per common share dividend (about 14% annualized). The dividend appears to be stable.
- ARR has eliminated its longest dated fixed rate Agency RMBS. This makes it less susceptible to interest rate increases -- a more stable stock.
- Read the rest of the article for more details, if you are interested so far.
Investment In Armour Residential REIT Nets Profitable Double-Digit Gains
- ARR confirms $0.05 for third quarter dividends.
- Dividend over 14% and reinvesting dividends goes higher.
- Core Income was strong in first quarter and positive through second quarter.
- ARR expected to release second quarter financial report in August.
ARMOUR Stands Out With Significant Price Appreciation Potential And Attractive Dividend Yield
- Company has been taking the right measures in the ongoing industry environment.
- ARR has been repositioning its portfolio by favoring 15-year MBS to protect its book value.
- Portfolio repositioning should reduce rate sensitivity moving forward.
- Stock offers impressive total return of 23%.
14% Dividend, Likely Book Value Gain, Make ARMOUR Residential REIT A Buy
- The dividend for Q2 2014 has already been declared as $0.05 per month ($0.15 for Q2 2014). This is stable now for the third quarter in a row.
- The decrease in the yield for the 10 year US Treasury Note should mean a book value increase in Q2 2014 for ARR.
- The portfolio realignment in Q1 and Q2 2014 should make ARR's portfolio safer from interest rate increases going forward.
- The interest rates decreased in Q1 2014. Yet ARR lost book value. What will change that for ARR in Q2 2014 and future quarters?
- Company continues to be attractive after maintaining dividends.
- Macro-economic environment is stable and economic indicators are showing solid trends.
- ARR still needs to strike balance by managing risk and increasing asset yield.
Strength In ARMOUR Residential REIT's Portfolio - May 2014 SEC Filing
- ARMOUR holds over $16.7 billion in fixed rate securities and $192 million in ARM and hybrid securities.
- Leverage ratio has climbed to 8.2x to 1, as the company target is 8x to 9x to 1.
- ARR continues to repurchase common shares.
- Recommend ARR as a buy and hold long-term investment.
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Wed, Oct. 29, 5:16 PM
- Q3 core income of $49M or $0.13 per share vs. $50.9M and $0.13 in Q2. Quarterly dividends of $0.15.
- Book value per share of $4.58 slips from $4.90 at end of Q2. Today's close of $4.00 is a 12.7% discount to book.
- Net interest margin of 1.43% slips three basis points from Q2.
- CPR of 7.46% up 234 basis points from Q2.
- Leverage of 8.42:1 vs. 7.9:1 one quarter ago.
- Previously: ARMOUR Residential REIT misses by $0.02
- ARR -0.5% AH
- Previously: ARMOUR Residential REIT misses by $0.02
Wed, Oct. 29, 4:58 PM
Fri, Aug. 1, 7:15 AM
- Core income of $50.9M or $0.13 per share vs. $58.3M and $0.15 in Q1. Quarterly dividends of $0.15.
- Book value per share of $4.90 up from $4.67. Last night's close of $4.21 is a 14.1% discount to book.
- Net interest margin of 1.46% slides 36 basis points from Q1.
- Leverage of 7.9:1 vs. 8.12:1.
- CPR of 5.12% vs. 3.68%.
- Previously: ARMOUR Residential REIT misses by $0.03
- ARR fell 0.5% AH last night.
Thu, Jul. 31, 5:06 PM
Mon, May. 5, 8:21 AM
- Core income of $58.3M or $0.15 per share compares to $59.3M and $0.15 in Q4; $0.15 quarterly dividend.
- Book value per share of $4.67 slips from $4.75 after payment of $0.15 in dividends. Friday's closing price of $4.25 is a 9% discount to book.
- Leverage of 8.12x up from 6.92x; average net interest margin of 1.82% up 22 basis points; average CPR of 3.68% slips from 4.8%.
- Repurchased 600K shares at average price of $4.31 each.
- Source: Press Release
- ARR no trades premarket
Thu, Feb. 27, 5:55 AM
Wed, Feb. 26, 10:36 PM
- Armour Residential (ARR) Q4 core EPS of $0.15 beats by $0.02.
- End of year book value per share of $4.75 falls 9.7% from $5.26 at the end of Q3. Today's closing price of $4.34 is an 8.6% discount to Dec. 31 book.
- Average net interest margin of 1.6% is up 36 basis points from Q3 as CPR falls to 4.8% from 8.8%.
- Leverage of 6.92:1 is about unchanged from Q3. $4B of agency paper sold during Q4 leaving portfolio size of $14.6B vs. $16.7B in Q3. Company continues to shorten duration in 2014, selling $5.5B of 25-year and 30-year fixed rate mortgages thus far this year, leaving $1.3B of 30-years left to be sold. $3.7B of 15-year mortgages have been purchased.
- 13.375M shares repurchased during quarter at an average price of $3.89 each.
- Press release
Tue, Feb. 4, 11:51 AM
- Addressing an analyst cadre somewhat uncomfortable with American Capital's (AGNC +1.6%) new policy of purchasing the common stock of its agency mREIT competitors (Wells' Joel Houck: Do you know their hedging strategies? What happens when one blows up?), CIO Gary Kain says the discounts to asset value are so great as to mitigate much of the risk.
- Kain does acknowledge some risks though, and reminds that the purchase program is but a small slice of AGNC's overall portfolio ($400M of others' stock bought so far vs. nearly $600M of AGNC buybacks just in Q4).
- For now, there won't be any disclosure of which names American Capital is buying - a position also not sitting well with those on the call. Should the positions get large enough though, regulatory filings might be required.
- Kain also reminds that AGNC isn't just boosting risk with these purchases - instead it's selling MBS at 100 cents on the dollar to buy them back (via other mREITs) at somewhere in the area of 80 cents on the dollar.
- Most of the mREIT sector (REM +0.7%) is ahead again today - Armour (ARR +0.9%), CYS (CYS +2.8%), Hatteras (HTS +1.6%), American Capital Mortgage (MTGE +0.6%), PennyMac (PMT +1.2%) - but Annaly (NLY -0.6%) lags, perhaps as investors feel it was far more conservatively positioned going into 2014 than AGNC was.
- Earnings call is still ongoing
- Previous coverage
Thu, Jan. 30, 10:20 AM
- You're seeing a lot of demand in the assets we hold, says Capstead Mortgage (CMO +1.5%) management on the conference call after reporting a blowout Q4. In a steepening yield curve environment - the short-end anchored while long rates move higher - Capstead is benefitting from tightening spreads in the 5/1 ARMs it mostly holds.
- Mr. Market seems to have fleshed this out, and Capstead was already trading for right around book value (reported at $12.47 as of Dec. 31) vs. the double-digit discounts for long-end players like Annaly (NLY +0.2%), American Capital (AGNC -0.3%), Armour (ARR), and CYS Investments (CYS -0.5%).
- Another in the adjustable-rate arena is Hatteras Financial (HTS +1.5%).
- Related ETFs: REM, MORT, MORL
Oct. 28, 2013, 4:38 PM
- Core income - includes unrealized gains - of $0.11 per share compares to $0.18 in Q2. Q2 quarterly dividend was $0.21 per share.
- Book value per share of $5.26 off 3.1% from $5.43 at the end of Q2. Today's close of $4.38 puts the stock at a 16.7% discount.
- Company sold $6B of MBS during quarter and realized losses of $301M. Portfolio size of $16.7B at end of quarter compares to $22.6B at end of Q2. Leverage of 6.93x.
- Net interest margin of 1.24% is off 14 basis points from Q2.
- ARR -1.8% AH.
- Q3 results, press release.
Oct. 28, 2013, 4:36 PM
Aug. 1, 2013, 5:01 PM| 12 Comments
May. 3, 2013, 9:09 AMArmour Residential (ARR) revises last night's earnings release, saying core EPS of $0.18 should actually have been $0.20, and GAAP EPS of $0.27 should have been $0.29. The total income wasn't changed, just the per share amounts. Stock's off 1.9% premarket, inline with sizable drops in most mREITs following the AGNC loss. | 4 Comments
May. 2, 2013, 8:42 PM
May. 1, 2013, 12:10 AMNotable earnings after Wednesday’ s close: ALL, ARI, ARR, ATML, ATO, ATW, AXLL, AXTI, BKD, BMR, CACI, CAR, CBS, CJES, CNQR, CSOD, CVD, CVI, CVRR, CWT, CXO, DVR, DX, DXCM, DXPE, EDMC, ESS, EXPD, EXXI, FB, FNF, FRT, G, GLUU, GNK, GTAT, HNSN, HR, IPI, IPXL, IVR, JDSU, KIM, LNC, LOCK, LVS, MAC, MAR, MET, MUR, NAVB, NGD, NLY, NTRI, PHH, POL, PRU, PSE, PXD, QUIK, ROVI, SAM, SFLY, SGMO, SLTM, SNCR, STX, TEG, TGI, TPC, TSO, TTEK, UAN, UNM, V, VVC, WES, WLT, YELP | Comment!
Apr. 30, 2013, 5:35 PMNotable earnings after Wednesday’ s close: ALL, ARI, ARR, ATML, ATO, ATW, AXLL, AXTI, BKD, BMR, CACI, CAR, CBS, CJES, CNQR, CSOD, CVD, CVI, CVRR, CWT, CXO, DVR, DX, DXCM, DXPE, EDMC, ESS, EXPD, EXXI, FB, FNF, FRT, G, GLUU, GNK, GTAT, HNSN, HR, IPI, IPXL, IVR, JDSU, KIM, LNC, LOCK, LVS, MAC, MAR, MET, MUR, NAVB, NGD, NLY, NTRI, PHH, POL, PRU, PSE, PXD, QUIK, ROVI, SAM, SFLY, SGMO, SLTM, SNCR, STX, TEG, TGI, TPC, TSO, TTEK, UAN, UNM, V, VVC, WES, WLT, YELP | 2 Comments
ARR vs. ETF Alternatives
ARMOUR Residential REIT Inc invests in and manages a leveraged portfolio of residential mortgage backed securities. The Company is externally managed by ARMOUR Residential Management LLC, pursuant to a management agreement.
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