Value
7.5/10data confidence 33%| Component | Sub-score |
|---|---|
| p ocf | 9.8 |
| Analyst target | 6.0 |
- ▸P/OCF: 3.8x (FFO proxy — REITs gated off P/E)
- ▸Attractively valued
ARR · Why this verdict
Why ARMOUR Residential REIT (ARR) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score4.9/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
ARMOUR Residential REIT looks cheap at 3.9x price-to-operating-cash-flow, but weak business quality (3.4/10, no moat), a confirmed downtrend and a string of earnings misses leave only 6.3% upside against 7.1% downside.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The stock is attractively valued at 3.9x price to operating cash flow (used as a funds-from-operations proxy for REITs), with a value score of 7.5/10. Valuation breakdown | Valuation should stay below 6x price to operating cash flow while the 23.1% dividend yield remains covered. | ↑Improving |
| CounterA mortgage REIT's low multiple often reflects book-value erosion and volatile interest-rate-driven earnings, so the cheapness may be a value trap. | ||
Business quality is below the minimum bar at 3.4/10 with no competitive moat and zero scores on return on equity, return on assets and net margin. Quality breakdown | Quality score should recover toward 5/10 if profitability stabilizes over the next 12 months. | →Stable |
| CounterMortgage REIT returns swing with the rate cycle, so a single weak stretch may understate steady-state earning power and the quality score could rebound quickly. | ||
The stock sits below its 200-day moving average with the average sloping down 1.8% over 30 days and falling on-balance volume, a confirmed downtrend with momentum at 3.1/10. Momentum breakdown | Momentum should rebuild above 4.5/10 before the downtrend can be considered over. | ↓Deteriorating |
| CounterTechnical and Bollinger scores are strong (8.6 and 8.9 for support/resistance), suggesting the stock may be near support and primed for a mean-reversion bounce. | ||
ARMOUR missed EPS estimates in 2 of the last 4 quarters and the other 2 were only in line, with zero beats and an average surprise of -52%. Earnings | EPS should start meeting or beating estimates at the next report on 2027-02-17 for earnings credibility to return. | ↓Deteriorating |
| CounterThe last two quarters were in line at 0.71 and 0.72 per share, suggesting estimates have reset and the miss streak may be ending. | ||
Price is 6.3% below the $13.23 analyst target while downside to the stop is 7.1%, giving reward-to-risk of just 0.88. Estimated upside | Reward-to-risk should reach at least 1.5 before an initial position is justified. | →Stable |
| CounterAnalysts see 25% upside before haircut and the 23.1% dividend yield could offset price weakness, so total return may be better than price-only asymmetry suggests. | ||
The stock is attractively valued at 3.9x price to operating cash flow (used as a funds-from-operations proxy for REITs), with a value score of 7.5/10.
↑ImprovingValuation breakdown
- Expectation
- Valuation should stay below 6x price to operating cash flow while the 23.1% dividend yield remains covered.
CounterA mortgage REIT's low multiple often reflects book-value erosion and volatile interest-rate-driven earnings, so the cheapness may be a value trap.
Business quality is below the minimum bar at 3.4/10 with no competitive moat and zero scores on return on equity, return on assets and net margin.
→StableQuality breakdown
- Expectation
- Quality score should recover toward 5/10 if profitability stabilizes over the next 12 months.
CounterMortgage REIT returns swing with the rate cycle, so a single weak stretch may understate steady-state earning power and the quality score could rebound quickly.
The stock sits below its 200-day moving average with the average sloping down 1.8% over 30 days and falling on-balance volume, a confirmed downtrend with momentum at 3.1/10.
↓DeterioratingMomentum breakdown
- Expectation
- Momentum should rebuild above 4.5/10 before the downtrend can be considered over.
CounterTechnical and Bollinger scores are strong (8.6 and 8.9 for support/resistance), suggesting the stock may be near support and primed for a mean-reversion bounce.
ARMOUR missed EPS estimates in 2 of the last 4 quarters and the other 2 were only in line, with zero beats and an average surprise of -52%.
↓DeterioratingEarnings
- Expectation
- EPS should start meeting or beating estimates at the next report on 2027-02-17 for earnings credibility to return.
CounterThe last two quarters were in line at 0.71 and 0.72 per share, suggesting estimates have reset and the miss streak may be ending.
Price is 6.3% below the $13.23 analyst target while downside to the stop is 7.1%, giving reward-to-risk of just 0.88.
→StableEstimated upside
- Expectation
- Reward-to-risk should reach at least 1.5 before an initial position is justified.
CounterAnalysts see 25% upside before haircut and the 23.1% dividend yield could offset price weakness, so total return may be better than price-only asymmetry suggests.
Per-dimension breakdown
Quality
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.0 |
| Gross margin | 10.0 |
| Net margin | 0.0 |
| Current ratio | 4.4 |
| Moat | 4.8 |
| Piotroski F | 4.4 |
- ▸No competitive moat
Growth
5.0/10data confidence 50%Momentum
2.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 6.5 |
| OBV | 1.0 |
| MA position | 1.0 |
| Volume | 0.3 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -2.2%/30d — confirmed downtrend
Sentiment
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.3 |
| Price target | 8.1 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (4.0) — signal dampened
- ▸Analyst upside: 24%
Insider
6.5/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| holder change | 8.1 |
| notable moves | 7.0 |
- ▸Modest insider selling — $564,418 (0.033% of mkt cap)
- ▸Institutions accumulating
Peer rank
2.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 0.7 |
| quality rank | 1.4 |
| growth rank | 5.0 |
Technical
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.7 |
| support resistance | 7.0 |
| 52w position | 4.8 |
| gap | 5.0 |
Risk (lower is worse)
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 10.0 |
| volatility | 3.7 |
| put call | 10.0 |
| implied vol | 3.4 |
| beta | 5.2 |
| debt equity | 0.0 |
Catalyst
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 5.5 |
- ▸Earnings concerns: 0B/2M
- ▸Dividend: 23.7%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:105d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:2.5<4.5
- ASYMMETRY:0.7<1.5@spot
- DEATH_CROSS:HARD_BLOCK
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.74
Upside
+5.2%
Downside
7.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeSector Rotation — Real Estate sector out of favor, value=7.5
SuitabilityAggressive — Beta 1.45>1.3, MCap $1.7B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the MOMENTUM gate's 2.5<4.5 outcome against Value at 7.5 and asymmetric R:R of 0.74.
The strongest dimensions are Value at 7.5, Sentiment at 6.5, and Insider at 6.5; the weakest are Peer rank at 2.5, Momentum at 2.5, and Catalyst at 3.1. The V9 engine flagged 3 failed gates with 1 warning, producing an asymmetric reward-to-risk of 0.74 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Cheap Cash Flow Valuation
Trip ifPrice to operating cash flow rises above 8x from current 3.9x.
- P2Weak Quality No Moat
Trip ifQuality score rises above 5.0/10 from current 3.4.
- P3Confirmed Price Downtrend
Trip ifMomentum score rises above 4.5/10 from current 3.1.
- P4Persistent Earnings Misses
Trip ifEPS surprise exceeds 0% for 2 consecutive quarters.
- P5Thin Upside Negative Asymmetry
Trip ifReward-to-risk exceeds 1.5 from current 0.88.