AGNC Investment (AGNC) Valuation Check as Forecasted Fed Rate Cuts Boost Interest in Its Agency MBS Strategy

AGNC Investment (AGNC) is back on investors radar as fresh commentary around potential Federal Reserve rate cuts in 2025 and 2026 reshapes expectations for income plays tied to Agency mortgage backed securities.

See our latest analysis for AGNC Investment.

That backdrop helps explain why AGNC’s 13.04% year to date share price return and 27.57% one year total shareholder return suggest momentum is quietly building as investors start to price in a friendlier rate environment and lower perceived risk.

If AGNC’s income story has your attention, it could be a good moment to see what else is moving and discover fast growing stocks with high insider ownership.

Yet with AGNC trading just above analyst targets but still at a steep discount to intrinsic value estimates, investors face a key question: is the stock mispriced, or already reflecting future rate cuts and book value recovery?

Price-to-Earnings of 16.4x: Is it justified?

AGNC Investment trades on a price-to-earnings ratio of 16.4 times, slightly below the peer average yet above the broader US Mortgage REITs industry benchmark.

The price-to-earnings multiple compares the company’s current share price to its earnings per share, making it a direct snapshot of what investors are willing to pay for today’s profits. For a mortgage REIT, this metric is closely watched given earnings are heavily shaped by funding costs, portfolio yields, and leverage.

On one hand, AGNC screens as good value against the estimated fair price-to-earnings ratio of 19.3 times. This suggests the market may be underpricing its forecast earnings recovery and strong projected growth profile. On the other hand, the stock looks expensive when lined up against the US Mortgage REITs industry average of 13.1 times, which suggests investors are already assigning a premium versus many sector peers.

This premium to the sector, but discount to the fair price-to-earnings ratio, creates a tension: a valuation band where sentiment could swing quickly as earnings trends and rate expectations evolve.

Explore the SWS fair ratio for AGNC Investment

Result: Price-to-Earnings of 16.4x (ABOUT RIGHT)

However, unexpected rate volatility or renewed pressure on mortgage spreads could still undermine book value recovery and stall the improving sentiment around AGNC’s premium valuation.

Find out about the key risks to this AGNC Investment narrative.

Another View on Value

Our SWS DCF model paints a much starker picture, suggesting AGNC is trading at roughly a 53% discount to its fair value, with shares at $10.49 versus an estimated $22.49. If that gap is even partly right, are investors underestimating the potential upside or overestimating the risks?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out AGNC Investment for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 908 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own AGNC Investment Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a personalized view in just minutes: Do it your way.

A great starting point for your AGNC Investment research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

Looking for more investment ideas?

AGNC might be compelling, but you owe it to your future self to scan the market for other potential setups using the Simply Wall St Screener today.

• Explore early upside by targeting under-the-radar opportunities through these 3571 penny stocks with strong financials before broader market attention potentially affects valuations.
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• Identify potential mispricing by zeroing in on these 908 undervalued stocks based on cash flows where current cash flows may not be fully reflected in share prices.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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