Assessing ARMOUR Residential REIT’s (ARR) Valuation Following Strong Earnings Growth and Ongoing Share Buybacks

ARMOUR Residential REIT (ARR) posted sharply higher earnings for the third quarter and first nine months of 2025, along with ongoing share buybacks. These updates are sparking renewed attention among investors this quarter.

See our latest analysis for ARMOUR Residential REIT.

ARMOUR Residential REIT’s latest earnings beat and continued buybacks come as the share price has shown mixed momentum. The stock is up 5.5% over the past month, but still down 13.9% year-to-date. However, with a 4.1% total return over the past year, the stock is managing to reward patient investors despite recent headwinds and shifts in sentiment.

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But does ARMOUR Residential REIT’s strong earnings growth and ongoing buybacks mean the stock is undervalued right now? Alternatively, is the market already pricing in future improvements, leaving limited room for further gains?

Price-to-Earnings of 34.8x: Is it justified?

At the current share price of $16.34, ARMOUR Residential REIT is trading at a price-to-earnings (P/E) ratio of 34.8x. This places it well above the average for both the US Mortgage REITs industry and its immediate peers.

The price-to-earnings ratio is a common metric used to value real estate investment trusts, as it relates the company’s share price to its earnings per share. A higher P/E can signal that investors expect stronger growth or greater stability, but may also indicate over-optimism about future results in a sector where performance depends heavily on interest rates and real estate cycles.

For ARMOUR Residential REIT, the current P/E of 34.8x is significantly higher than the US Mortgage REITs industry average of 12.6x and is also above the peer group average at 13.2x. While certain high-growth assumptions may justify a premium, this valuation appears elevated. Compared to the estimated "fair" P/E ratio of 47.4x, however, there is still some room for the market to move higher if expectations are met.

Explore the SWS fair ratio for ARMOUR Residential REIT

Result: Price-to-Earnings of 34.8x (OVERVALUED)

However, ARMOUR Residential REIT still faces uncertainty from interest rate swings and potential real estate market volatility. Both of these factors could challenge future earnings growth.

Find out about the key risks to this ARMOUR Residential REIT narrative.

Build Your Own ARMOUR Residential REIT Narrative

If you want to dig deeper or have a different perspective, you can easily explore the figures and build your own view in just a few minutes. Do it your way.

A great starting point for your ARMOUR Residential REIT research is our analysis highlighting 1 key reward and 4 important warning signs that could impact your investment decision.

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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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