DALLAS, TX -- April 24th, 2026 -- Armour Residential REIT, Inc. (NYSE: ARR): Stonegate Capital Partners Updates Coverage on Armour Residential REIT, Inc. (NYSE: ARR). ARR reported a net loss available to common shareholders of $(58.0)M, or $(0.49)/share, as stronger carry income was more than offset by quarter-end mark-to-market pressure across the portfolio. Net interest income improved to $70.7M, but this was outweighed by a $(182.6)M loss on Agency securities and a $(10.6)M loss on U.S. Treasuries, partially offset by $83.0M of derivative gains. The primary drag in the quarter was the 6.5% decline in book value to $17.42/share, resulting in (2.6)% total economic return, reflecting the impact of wider spreads and weaker MBS pricing late in the period.
Additional Metrics: Underlying earnings trends were firmer than the headline loss suggests, with distributable earnings available to common shareholders of $90.5M, or $0.76/share, up from $0.71/share in 4Q25 and again covering the $0.72/share dividend. Economic net interest income rose to $109.0M, while economic net interest spread widened to 1.84% from 1.77%, as lower funding costs more than offset modest asset-yield compression. Management emphasized staying active during spread dislocations, maintaining robust liquidity, and adjusting hedges dynamically, which we think supports the view that earnings power improved even as reported results remained pressured by marks.
Strong Dividend Coverage: ARR paid $0.24 per month, or $0.72/share, during 1Q26, with the dividend covered by $0.76/share of distributable earnings, implying a payout ratio of roughly 94.7%. That compares with 101.4% in 4Q25, when the same dividend exceeded distributable earnings of $0.71/share. Using management’s disclosed $16.68 quarter-end stock price, the current run-rate implies an annualized yield of approximately 17.3%. More importantly, coverage improved sequentially and moved back below 100%, which suggests better alignment between the dividend and current earnings capacity.
Balance Sheet/Capital Positioning: ARR exited 1Q26 with $1.1B of liquidity and a $21.1B portfolio that remained heavily concentrated in Agency assets, including 92.5% Agency MBS, 4.7% U.S. Treasuries, and 2.8% TBA securities. Repo borrowings ended the quarter at $18.5B, with 43.4% sourced through affiliate BUCKLER, while debt-to-equity and implied leverage were 7.9x and 8.2x, respectively. During the quarter, ARR also raised $215.3M of common equity and $6.4M of preferred equity, while repurchasing 125,000 shares, actions that helped preserve liquidity and deployment capacity despite book value pressure. We think the key takeaway is that ARR kept its balance sheet flexible and largely Agency-focused.
Valuation: We use both a Distributable Payout Model and P/BV comp analysis to guide our valuation. Our Distributable Net Income Model assumes that ARR will continue to payout 60.0% to 80.0% of its distributable net income with an average discount rate of 12.5% and a growth rate of 2.0%. This results in a valuation range of $17.93 to $23.91 with a mid-point of $20.92. Our P/BV valuation uses a +/-5.0% discount/premium to BV of $18.05. This is in-line with Comps trading at a BV/Share average premium of -2.7%. This returns a valuation range of $18.05 to $18.95 with a mid-point of $18.50. Lastly, we note that ARR currently pays a dividend yield of 16.5%, which is greater than average comps at 14.7%.
Stonegate Capital Partners is a leading capital markets advisory firm providing investor relations, equity research, and institutional investor outreach services for public companies. Our affiliate, Stonegate Capital Markets (member FINRA) provides a full spectrum of investment banking services for public and private companies.
SOURCE: Stonegate, Inc.
