Is Two Harbors Investment Corp. overvalued or undervalued?

As of 28 July 2025, the valuation grade for Two Harbors Investment Corp. has moved from very attractive to risky, indicating a significant deterioration in its investment appeal. The company appears to be overvalued, particularly when considering its P/E ratio of 80, which is substantially higher than its peers, and a price-to-book value of 0.52, suggesting that the market is pricing the stock at a premium relative to its net assets. Additionally, the EV to EBIT and EV to EBITDA ratios both stand at 0.65, further reinforcing the notion of overvaluation in comparison to the industry.
In terms of peer comparison, Two Harbors Investment Corp. has a P/E ratio that starkly contrasts with Acadia Realty Trust at 57.50 and LTC Properties, Inc. at 18.85, both of which are classified as very attractive. The company's recent stock performance has also lagged significantly behind the S&P 500, with a year-to-date return of -16.06% compared to the index's 12.22%, and a staggering -52.98% over the past five years, while the S&P 500 has gained 96.61%. This underperformance further underscores the risks associated with investing in Two Harbors Investment Corp. at its current valuation.