Is ARMOUR Residential REIT, Inc. overvalued or undervalued?

As of 12 February 2025, the valuation grade for ARMOUR Residential REIT, Inc. has moved from very attractive to risky, indicating a significant shift in the company's perceived value. The company appears to be overvalued, particularly given its negative P/E ratio and a Price to Book Value of 0.79. Additionally, the EV to EBIT and EV to EBITDA ratios both stand at 2.08, which, while not excessively high, suggest that the company may not be generating sufficient earnings relative to its enterprise value.
In comparison to its peers, ARMOUR Residential REIT, Inc. shows a stark contrast with a peer that has a P/E ratio of -839.25, indicating severe losses. The company's dividend yield of 48.63% is notably high, yet this may not be sustainable given the negative return on equity (ROE) of -0.09%. Over the past year, ARMOUR has underperformed significantly against the S&P 500, with a return of -16.44% compared to the index's 10.26%. This performance further reinforces the notion that the stock is overvalued in the current market environment.