Is Invesco Mortgage Capital, Inc. overvalued or undervalued?

As of 20 February 2025, the valuation grade for Invesco Mortgage Capital, Inc. has moved from does not qualify to very attractive, indicating a significant improvement in its valuation outlook. Based on the current metrics, the company appears undervalued. Key ratios include a P/E ratio of 10, a Price to Book Value of 0.66, and an EV to EBITDA of 1.08, all suggesting that the stock is trading at a discount relative to its earnings and assets.
In comparison to peers, TPG RE Finance Trust, Inc. has a P/E ratio of 11.75 and Gladstone Commercial Corp. has a much higher P/E of 20.11, highlighting that Invesco Mortgage Capital is priced lower despite similar or better performance metrics. Notably, the company's dividend yield stands at an astonishing 1375.30%, which is significantly higher than the industry average, further supporting the case for undervaluation. Over the past year, Invesco Mortgage Capital has returned -18.71%, while the S&P 500 has gained 17.14%, reinforcing the perception that the stock may be undervalued relative to broader market performance.