ABR

We rate ARBOR REALTY TRUST INC (ABR) as Avoid with a composite score of 29.5/100 at a current price of $7.29. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.

The rating is primarily driven by strength in investment (51th percentile) and value (38th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (9th percentile) and quality (26th percentile) tempers our overall conviction. We assign a No Moat rating (18/100), High uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

ARBOR REALTY TRUST INC holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 29.5/100 places it at rank #4556 in our full 7,333-stock universe. At $2.3B in market capitalization, ARBOR REALTY TRUST INC is a mid-cap player in the Finance, Insurance, And Real Estate space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -56% combined with momentum at the 9th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 0% (-76.5pp vs sector) narrow to operating margins of -66% (-82.9pp vs sector) and net margins of 73.3%, yielding a gross-to-net conversion rate of N/A%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $7.29, ARBOR REALTY TRUST INC is trading at a premium to fundamental value. Our value factor score of 38/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 7.1x (a 40% discount to the sector median of 11.9x), EV/EBITDA of 561.0x (at a premium), P/B of 0.5x, P/S of 4.3x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a High uncertainty rating to ARBOR REALTY TRUST INC. Key risk factors include significant leverage (334% debt-to-equity), below-average price stability (31th percentile), weak quality scores (26th percentile). The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (334% debt-to-equity); below-average price stability (31th percentile); weak quality scores (26th percentile). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 31th percentile and quality factor at the 26th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: a 11.96% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate ARBOR REALTY TRUST INC's capital allocation as Poor. Key concerns include elevated leverage (334% D/E), weak asset returns (ROA 1.5%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — ARBOR REALTY TRUST INC significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, ARBOR REALTY TRUST INC receives a Avoid rating with a composite score of 29.5/100 (rank #4556 of 7,333). Our quantitative framework assigns a No Moat (18/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 31/100.

Our analysis does not support a constructive view on ARBOR REALTY TRUST INC at this time. The combination of limited competitive advantages, high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.