AG Mortgage Investment Trust (MITT): Net Profit Margin Drops to 32.2%, Testing Bullish Value Narrative

AG Mortgage Investment Trust (MITT) reported a forecasted earnings growth of 19.6% per year, outpacing the US market’s expected 15.8% rate. Revenue is projected to rise by 7.6% per year, which trails the 10.4% market average, while the net profit margin now sits at 32.2%, down from 72.2% the year before. With shares trading at a Price-To-Earnings ratio of 8.8x, below peers and the broader industry, investors are weighing MITT’s attractive valuation and strong recent earnings trajectory against a notable contraction in profitability margins.

See our full analysis for AG Mortgage Investment Trust.

Up next, we’ll see how these results measure up to the leading narratives shaping expectations around AG Mortgage Investment Trust. Let’s find out where the numbers support the story and where they defy it.

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Book Value Slide Signals Reliance on One-Offs

• Book value decreased by 2.4% this quarter, with management attributing the drop to "onetime" issues from maturing commercial real estate loans.
• Analysts' consensus view points out that while persistent U.S. housing demand and a strategic focus on residential assets are likely to boost net interest income, the risk remains that further book value erosion from troubled commercial loans could threaten both future profitability and shareholders’ equity.
  • The current net profit margin of 32.2%, well down from 72.2% the prior year, raises flags for those concerned about earnings stability.
  • Analysts expect profit margins to recover to 43.5% over three years, but hitting this target depends on avoiding more surprise write-downs.
• Consensus narrative: If MITT can deliver on its stabilization promises, the downside risk from lingering commercial real estate exposure narrows, but the margin for error remains slim. 📊 Read the full AG Mortgage Investment Trust Consensus Narrative.

Refinancing and Tech Upgrades Aim to Sustain Payouts

• AG Mortgage redeployed over $40 million into higher-yielding assets after refinancing legacy high-cost debt, a move expected to boost net interest income and support dividends.
• Analysts' consensus view highlights that proprietary analytics and stricter underwriting are improving credit performance, enhancing long-term earnings stability.
  • Ongoing investor appetite for securitizations is enabling MITT to term out funding at lower costs, favorably impacting distributable earnings.
  • Yet, scaling Arc Home adds execution risk; if anticipated origination volumes do not materialize, expected accretion to earnings could fall short.

Attractive Valuation Discount Relative to Peers

• Shares currently trade at 8.8x Price-To-Earnings, which is significantly below peer (14.5x) and industry (12.5x) averages, and just under the DCF fair value of $7.88 per share.
• Analysts' consensus view suggests that at a current share price of $7.83, against a consensus analyst target of $8.70, the margin for outperformance hinges on the company's ability to deliver sustained profit growth and margin recovery amid sector risks.
  • If profit margins rise as projected and capital redeployment continues, the valuation gap versus peers could narrow, supporting potential upside.
  • However, persistent exposure to interest rate and credit risks may limit a rerating if markets anticipate further setbacks.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for AG Mortgage Investment Trust on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your AG Mortgage Investment Trust research is our analysis highlighting 3 key rewards and 4 important warning signs that could impact your investment decision.

See What Else Is Out There

AG Mortgage Investment Trust continues to face pressure from shrinking profit margins and ongoing risks tied to commercial real estate assets, which weigh on future stability.

If you want companies with stronger financial resilience and less exposure to these pitfalls, check out solid balance sheet and fundamentals stocks screener (1977 results) for healthier balance sheets and steadier fundamentals.

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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