ARMOUR Residential REIT, Inc.
ARR
$16.27
+0.87%
ARMOUR Residential REIT, Inc. is a mortgage real estate investment trust (mREIT) that invests primarily in residential mortgage-backed securities (MBS) issued or guaranteed by U.S. government-sponsored enterprises (GSEs) or Ginnie Mae, along with U.S. Treasury securities and money market instruments. As a specialized mREIT, it focuses on generating income through the spread between interest earned on its MBS portfolio and its borrowing costs, making it highly sensitive to interest rate movements and prepayment risk. The current investor narrative centers on the company's ability to maintain its high dividend yield (over 17%) amid a volatile interest rate environment, with recent quarterly results showing a sharp revenue decline and net losses that have raised concerns about earnings sustainability and book value stability.…
ARR
ARMOUR Residential REIT, Inc.
$16.27
Related headlines
ARR 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on ARMOUR Residential REIT, Inc.'s 12-month outlook, with a consensus price target around $18.38 and implied upside of +12.9% versus the current price.
Average Target
$18.38
0 analysts
Implied Upside
+12.9%
vs. current price
Analyst Count
—
covering this stock
Price Range
$18 - $19
Analyst target range
Four analysts cover ARR, with a consensus recommendation of 'Buy' (mean rating 2.33 on a 1-5 scale where 1 is Strong Buy). The average target price is $18.38, implying 12.9% upside from the current price of $16.27. The distribution shows 2 Buy ratings (from Jones Trading and Janney Montgomery Scott) and 2 Neutral/Hold ratings (from UBS and JMP Securities), indicating a moderately bullish consensus but with notable caution. The target range spans from $18.00 (low) to $19.00 (high), a relatively narrow spread of $1.00, suggesting analysts have fairly aligned views. The high target of $19.00 implies 16.8% upside and likely assumes a stabilization in interest rates and a recovery in book value, while the low target of $18.00 implies 10.6% upside and may price in continued earnings volatility. Recent rating actions show Jones Trading upgraded from Hold to Buy in January 2026, while UBS has maintained Neutral since September 2025. The lack of downgrades and the upgrade suggest improving sentiment, but the narrow target range and mixed recommendations indicate uncertainty about the timing of a turnaround. The implied upside to the average target is modest, reflecting the stock's high risk profile.
Bulls vs Bears: ARR Investment Factors
ARR presents a high-risk, high-yield opportunity typical of mREITs. The bull case rests on a 17.1% dividend yield, a P/B below 1.0, and analyst targets implying 12.9% upside. However, the bear case is compelling: revenue collapsed 84.8% YoY, net losses are mounting, and the stock is in a sustained downtrend. The single most important tension is whether the company can stabilize its earnings and book value in a volatile interest rate environment. If interest rates decline or stabilize, ARR could recover; if rates rise further, the dividend may be at risk. Currently, the bearish evidence is stronger due to deteriorating fundamentals.
Bullish
- High dividend yield of 17.1%: ARR offers a dividend yield of 17.1%, which is extremely attractive for income-seeking investors. The company has maintained consistent dividend declarations, as evidenced by the March 2026 announcement, signaling stability in payouts despite earnings volatility.
- Price-to-book ratio below 1.0: ARR trades at a P/B ratio of 0.73x, below its book value, which is common for mREITs but may indicate undervaluation. Historically, P/B has ranged from 0.64 to 0.88, and the current level is near the middle, suggesting limited downside if book value stabilizes.
- Analyst consensus Buy with 12.9% upside: The average analyst target price is $18.38, implying 12.9% upside from the current price of $16.27. Two of four analysts rate it Buy, and the upgrade from Jones Trading in January 2026 suggests improving sentiment.
- Positive free cash flow generation: ARR generated $111.6 million in free cash flow in Q1 2026, improving from $35.6 million in Q4 2025. This provides a cushion for dividend payments and debt servicing, despite net losses.
Bearish
- Revenue collapsed 84.8% YoY in Q1 2026: Revenue fell to $55.96 million in Q1 2026 from $368.2 million a year earlier, a dramatic decline. This reflects extreme volatility in gains on MBS sales and interest income, making the top line unpredictable.
- Net loss of $54.85 million in Q1 2026: ARR reported a net loss of -$54.85 million (EPS -$0.49) in Q1 2026, compared to net income of $27.3 million in Q1 2025. The net margin was -98.0%, indicating the company is losing nearly all its revenue.
- High leverage with debt-to-equity of 7.94: The debt-to-equity ratio of 7.94 is typical for mREITs but risky in a rising rate environment. Interest expenses of $178.5 million in Q1 2026 overwhelmed operating income, contributing to the net loss.
- Stock in sustained downtrend, underperforming S&P 500: ARR's price declined 2.5% over the past year versus the S&P 500's +16.5% gain. The 3-month price change is -7.7%, and the stock is near the lower end of its 52-week range, indicating bearish momentum.
ARR Technical Analysis
ARR is in a sustained downtrend, with the stock price declining 2.5% over the past year and currently trading at $16.27, which is 84.2% of its 52-week range (low $13.98, high $19.31). The price sits closer to the lower end of the range, suggesting bearish sentiment and potential value opportunity, but also risk of further downside if support levels break. The 1-year price change of -2.5% underperforms the S&P 500's +16.5% gain, indicating significant relative weakness. Short-term momentum is decisively negative, with 1-month and 3-month price changes of -4.0% and -7.7%, respectively, accelerating the downtrend from the 1-year decline. The 1-month relative strength of -4.8% versus the S&P 500 confirms the stock is losing ground to the broader market, and the 3-month relative strength of -11.2% suggests no near-term reversal catalyst. Key support lies at the 52-week low of $13.98, a break below which could signal further downside toward $12.00. Resistance is at the 52-week high of $19.31; a breakout above that level would require a 19% rally and would indicate a trend reversal. With a beta of 1.34, ARR is 34% more volatile than the market, amplifying both upside and downside moves, which is critical for risk management.
Beta
1.34
1.34x market volatility
Max Drawdown
-19.0%
Largest decline past year
52-Week Range
$14-$19
Price range past year
Annual Return
-2.5%
Cumulative gain past year
| Period | ARR Return | S&P 500 |
|---|---|---|
| 1m | -4.0% | +1.4% |
| 3m | -7.7% | +3.3% |
| 6m | -11.4% | +6.3% |
| 1y | -2.5% | +16.0% |
| ytd | -10.1% | +8.4% |
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ARR Fundamental Analysis
Revenue has been highly volatile and recently collapsed. In Q1 2026, revenue was $55.96 million, down 84.8% year-over-year from $368.2 million in Q1 2025, and a dramatic decline from $349.0 million in Q4 2025. The multi-quarter trend shows extreme swings: Q2 2025 revenue was $194.5 million, Q3 2025 was $393.5 million, and Q4 2025 was $349.0 million, indicating that the company's top line is heavily influenced by fluctuating gains on MBS sales and interest income. This revenue instability makes the investment case highly uncertain, as the company's ability to generate consistent income is questionable. Profitability has deteriorated sharply. In Q1 2026, net income was -$54.85 million (EPS -$0.49), compared to net income of $27.3 million in Q1 2025 and $211.7 million in Q4 2025. Gross margin fell to 78.2% from 97.5% a year earlier, and net margin was -98.0%, meaning the company lost nearly as much as its revenue. The operating margin of 72.6% is positive, but high interest expenses ($178.5 million) overwhelmed operating income, leading to net losses. The trajectory is negative, with losses widening from Q2 2025 (-$75.6 million) to Q1 2026 (-$54.9 million), though the loss narrowed sequentially from Q4 2025's -$46.4 million. The balance sheet shows high leverage with a debt-to-equity ratio of 7.94, typical for mREITs but risky in a rising rate environment. Free cash flow was $111.6 million in Q1 2026, positive and improving from $35.6 million in Q4 2025, but the current ratio of 0.008 indicates extremely low liquidity (cash and equivalents relative to short-term liabilities). ROE was 14.3% on a trailing basis, but the negative net income in Q1 2026 suggests this metric will worsen. The company relies heavily on external financing, as evidenced by $652.3 million in net cash from financing in Q1 2026, primarily from debt issuance.
Quarterly Revenue
$55958000.0B
2026-03
Revenue YoY Growth
-84.8%
YoY Comparison
Gross Margin
78.2%
Latest Quarter
Free Cash Flow
$134276000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
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Valuation Analysis: Is ARR Overvalued?
Since net income is negative on a trailing basis (TTM net income is -$54.9 million as of Q1 2026), the P/E ratio is not meaningful. Therefore, we use the price-to-sales (P/S) ratio as the primary valuation metric. The trailing P/S ratio is 1.27x, but this is based on depressed trailing revenue; the forward P/S (using estimated revenue of $490.9 million) is approximately 3.4x, indicating the market expects a revenue recovery. The gap between trailing and forward P/S suggests optimism about revenue normalization. Compared to the industry average (REIT - Mortgage), ARR's P/S of 1.27x is below the sector median of around 5x, implying a discount. However, the EV/Sales ratio of 41.1x is extremely high, reflecting the company's high debt levels relative to sales. The P/B ratio of 0.73x is below 1.0, suggesting the stock trades below book value, which is common for mREITs with book value erosion. Historically, ARR's P/B has ranged from 0.64 to 0.88 over the past two years, and the current 0.73x is near the middle of that range. The P/E (trailing) of 5.34x is based on positive TTM EPS of $0.19, but this is distorted by large quarterly swings. The forward P/E of 5.44x implies the market expects earnings to stabilize, but the negative PEG ratio (-0.007) indicates expected earnings declines, which is a red flag.
PE
5.3x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 2x~13x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
20.2x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: ARR's financial health is precarious. Revenue collapsed 84.8% YoY to $55.96 million in Q1 2026, and net income was -$54.85 million, resulting in a net margin of -98.0%. The debt-to-equity ratio of 7.94 indicates high leverage, and interest expenses of $178.5 million exceeded operating income of $40.6 million. The current ratio of 0.008 shows extremely low liquidity, meaning the company relies heavily on external financing to meet short-term obligations. Free cash flow was positive at $111.6 million, but this may not be sustainable if revenue continues to decline.
Market & Competitive Risks: ARR is highly sensitive to interest rate movements, as its portfolio of MBS is directly affected by rate changes. With a beta of 1.34, the stock is 34% more volatile than the market, amplifying downside risk during selloffs. The stock has underperformed the S&P 500 by 18.99% over the past year, and the 3-month relative strength is -11.2%, indicating persistent weakness. Regulatory changes to GSEs or monetary policy could further pressure the sector. The narrow analyst target range ($18-$19) suggests limited upside expectations.
Worst-Case Scenario: If interest rates rise sharply or the yield curve inverts further, ARR could face margin compression, book value erosion, and potential dividend cuts. The 52-week low is $13.98, implying a 14.1% downside from the current price of $16.27. In a severe downturn, the stock could fall to $12.00, a 26.3% loss, based on historical volatility and the stock's beta. The worst-case scenario would involve a dividend suspension, triggering a sell-off toward the low end of the range.