Angel Oak Mortgage REIT Initiated with a Buy at Janney Montgomery Scott

Angel Oak Mortgage REIT (AOMR) has been initiated with a 'Buy' rating by Janney Montgomery Scott, highlighting the company's attractive investment potential in the mortgage REIT sector. This article will delve into the reasons behind this bullish outlook and explore the key factors driving AOMR's revenue and earnings growth compared to its peers.



Janney Montgomery Scott's bullish outlook for AOMR is primarily driven by the company's focus on acquiring and investing in first lien non-QM loans and other mortgage-related assets in the U.S. mortgage market. This strategy allows AOMR to generate attractive risk-adjusted returns for its stockholders through cash distributions and capital appreciation across interest rate and credit cycles. The company's external management and advisory structure, provided by an affiliate of Angel Oak Capital Advisors, LLC, a leading alternative credit manager with a vertically integrated mortgage origination platform, further enhances its investment potential.



Key financial metrics that differentiate AOMR from its peers in the REIT sector include:

1. Revenue Growth: AOMR's revenue growth has been significant over the past few years. In 2023, the company is expected to have a revenue of $51.46M, which is an increase of 31.91% from the previous year's revenue of $39.01M. This growth is driven by the company's ability to originate and acquire high-quality non-QM loans, which have a lower risk profile and higher yields compared to traditional mortgage-backed securities.
2. EPS Growth: AOMR is expected to experience a significant increase in earnings per share (EPS) in the fiscal year 2024. The company's EPS is projected to grow by 265.52% to $1.30, compared to $0.35 in the previous year. This growth is primarily driven by the company's ability to originate and acquire high-quality non-QM loans, as well as its strategic plan to reposition its portfolio, improve liquidity, reduce risk, and protect its capital structure.
3. Dividend Yield: AOMR has a high dividend yield, which is an attractive feature for investors. As of November 7, 2023, the company declared a regular quarterly dividend of $0.32 per share ($1.28 annualized), resulting in a dividend yield of 12.75% at the current share price of $10.04. This high dividend yield is significantly higher than the average dividend yield of AOMR's peers in the REIT sector, making AOMR an attractive investment option for income-oriented investors.



In conclusion, Janney Montgomery Scott's bullish outlook for AOMR is well-founded, as the company's focus on acquiring and investing in first lien non-QM loans and other mortgage-related assets, coupled with its external management and advisory structure, drives its revenue and earnings growth. AOMR's strong financial performance, as evidenced by its significant revenue and EPS growth, and its attractive dividend yield, sets it apart from its peers in the REIT sector. As such, AOMR presents an attractive investment opportunity for investors seeking exposure to the mortgage REIT sector.