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Some investors may be wondering whether AGNC Investment is still offering value at its recent price, or if the easy money has already been made.
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The stock recently closed at US$11.10, with returns of 3.1% over 7 days, 14.6% over 30 days, 1.6% year to date, 42.2% over 1 year, 78.9% over 3 years and 20.3% over 5 years. This performance raises questions about what is already reflected in the price.
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Recent coverage has focused on how AGNC Investment fits into the broader mortgage REIT space and how investors are thinking about interest rate sensitivity and income generation. This context helps explain why sentiment around the stock has shifted and why valuation is back in focus.
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AGNC Investment currently has a valuation score of 5 out of 6 . The next step is to look at how different valuation methods line up on the stock, and then finish with a way to think about value that goes beyond any single model.
Approach 1: AGNC Investment Excess Returns Analysis
The Excess Returns model looks at how much profit a company is expected to earn above the return that equity investors require, based on its book value and return on equity. Instead of focusing on near term earnings alone, it uses these “excess” profits to estimate what the business could be worth today.
For AGNC Investment, the model uses a Book Value of $8.90 per share and a Stable EPS of $1.54 per share, based on weighted future return on equity estimates from 6 analysts. The Average Return on Equity is 16.21%, while the Cost of Equity is $0.92 per share, implying an Excess Return of $0.62 per share. Stable Book Value is put at $9.47 per share, informed by estimates from 4 analysts.
Feeding these inputs into the Excess Returns framework produces an estimated intrinsic value of about $19.24 per share. Against the recent share price of $11.10, this implies an intrinsic discount of roughly 42.3%, which indicates that AGNC Investment is trading at a substantial gap to this model’s value estimate.
Result: UNDERVALUED
Our Excess Returns analysis suggests AGNC Investment is undervalued by 42.3%. Track this in your watchlist or portfolio , or discover 53 more high quality undervalued stocks .
Approach 2: AGNC Investment Price vs Earnings
For a profitable company, the P/E ratio is a straightforward way to connect what you pay today with the earnings the business is currently generating. Investors typically look for a P/E that lines up with their expectations for future growth and the level of risk they are taking on. A higher growth and lower risk profile can support a higher “normal” P/E, while slower growth or higher risk usually support a lower one.
AGNC Investment currently trades on a P/E of 9.79x. That sits below the Mortgage REITs industry average P/E of 10.03x and below the peer group average of 11.87x, which suggests the market is assigning a lower multiple than many of its sector peers. Simply Wall St’s Fair Ratio for AGNC Investment is 14.13x, which is the P/E that would be expected given its earnings profile, industry, profit margin, market cap and risk characteristics.
This Fair Ratio is more tailored than a simple peer or industry comparison because it adjusts for company specific factors like growth and risk rather than assuming all firms should trade on the same multiple. Comparing the Fair Ratio of 14.13x with the current P/E of 9.79x points to AGNC Investment trading on a lower multiple than this model would suggest.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your AGNC Investment Narrative
Earlier it was mentioned that there is an even better way to understand valuation. Think of a Narrative as your own clear story for AGNC Investment that connects what you believe about its future revenue, earnings and margins to a forecast, a Fair Value, and then a simple comparison with today’s price. All of this appears within the Simply Wall St Community page, where Narratives are shared, updated automatically when new news or earnings arrive, and can differ widely. For example, one investor might lean toward the higher analyst price target of US$11.00, while another might align with the lower target of US$8.25. This gives you a practical, side-by-side sense of how different views might translate into different decisions about when the stock looks attractive or when it looks fully priced.
Do you think there's more to the story for AGNC Investment? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice.It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include AGNC .
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