MFA's Chief Executive Officer, Craig Knutson, announced a 1.9% total economic return for the first quarter of 2025. This confidence is underscored by a recent dividend increase and a robust $10.7 billion investment portfolio.
Within the quarter, MFA successfully acquired $875 million in residential loans and securities, focusing on target asset classes. This includes $383 million in Non-QM loans, featuring an average coupon of 7.8% and a loan-to-value ratio of 65%.
Lima One, a division of MFA, generated $213 million in new business purpose loans and is slated for further growth following strategic personnel expansions. The company's Agency MBS holdings also increased to $1.6 billion as spreads remain appealingly wide.
Additionally, MFA completed its 17th Non-QM securitization during this period and sold $70 million in newly originated single-family rental loans, achieving favorable conditions.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 5 analysts, the average target price for MFA Financial Inc (MFA, Financial) is $11.00 with a high estimate of $12.50 and a low estimate of $8.50. The average target implies an upside of 11.00% from the current price of $9.91. More detailed estimate data can be found on the MFA Financial Inc (MFA) Forecast page.
Based on the consensus recommendation from 6 brokerage firms, MFA Financial Inc's (MFA, Financial) average brokerage recommendation is currently 2.3, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for MFA Financial Inc (MFA, Financial) in one year is $14.34, suggesting a upside of 44.7% from the current price of $9.91. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the MFA Financial Inc (MFA) Summary page.
MFA Key Business Developments
Release Date: February 19, 2025
- GAAP Book Value: $13.39 per share at December 31, 2024.
- Economic Book Value: $13.93 per share, a decrease of approximately 3.7% from $14.46 at the end of September.
- Total Economic Return: Negative 1.2% for the fourth quarter, positive 5.2% for the year.
- Dividends: $0.35 per share for the fourth quarter, $1.40 per share for the full year.
- GAAP Earnings: $5.9 million or a loss of $0.02 per basic common share for the fourth quarter.
- Distributable Earnings: $40.8 million or $0.39 per basic common share for the fourth quarter.
- Assets Growth: Increased from $10.8 billion to $11.4 billion in 2024.
- Non-QM Loans: $470 million added in the fourth quarter with a coupon of 7.8% and LTV of 67%.
- Lima One Loan Originations: $235 million in the fourth quarter with an average coupon of 9.5% and LTV of 67%.
- Securitizations: Three securitizations in Q4 backed by over $1 billion UPB of loans.
- 60-plus Day Delinquencies: Increased to 7.5% from 6.7% a quarter ago.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MFA Financial Inc (MFA, Financial) successfully grew its assets from $10.8 billion to $11.4 billion in 2024, including an increase in its agency book by over $800 million.
- The company executed three securitizations in Q4 2024 on over $1 billion of loans, enhancing its funding profile.
- MFA Financial Inc (MFA) maintained a stable recourse leverage of 1.7 times at year-end, indicating a strong financial position.
- The company declared dividends of $0.35 per share for Q4 and $1.40 per share for the full year, with favorable tax treatment for shareholders.
- MFA Financial Inc (MFA) reported a positive total economic return of 5.2% for the year 2024, showcasing its ability to generate returns despite market challenges.
Negative Points
- MFA Financial Inc (MFA) experienced a modest economic book value decline of approximately 3.7% in Q4 2024.
- The company reported a total economic return of negative 1.2% for Q4 2024, indicating challenges in the quarter.
- MFA Financial Inc (MFA) faced higher delinquencies in its portfolio, with 60-plus day delinquencies rising to 7.5% from 6.7% a quarter ago.
- The company's GAAP earnings for Q4 2024 were $5.9 million, resulting in a loss of $0.02 per basic common share.
- MFA Financial Inc (MFA) noted that the expiration of interest rate swaps would reduce reported distributable earnings and increase the reported cost of funds.
