AOMR

We rate Angel Oak Mortgage REIT, Inc. (AOMR) as Avoid with a composite score of 32.3/100 at a current price of $8.35. 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 stability (51th percentile) and value (33th percentile), which together account for the majority of the composite score. Offsetting weakness in quality (16th percentile) and momentum (22th percentile) tempers our overall conviction. We assign a No Moat rating (21/100), High uncertainty, and Standard 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.

Angel Oak Mortgage REIT, 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 32.3/100 places it at rank #4351 in our full 7,333-stock universe. At $223M in market capitalization, Angel Oak Mortgage REIT, Inc. is a small-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 -100% combined with momentum at the 22th 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.

Margin data is not available for Angel Oak Mortgage REIT, Inc., which limits our assessment of the company's cost structure and operating efficiency. We rely on factor-based signals to infer business quality in the absence of detailed margin data.

At a current price of $8.35, Angel Oak Mortgage REIT, Inc. is trading at a premium to fundamental value. Our value factor score of 33/100 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 3.4x (a 72% discount to the sector median of 11.9x), EV/EBITDA of 72.7x (at a premium), P/B of 0.8x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a High uncertainty rating to Angel Oak Mortgage REIT, Inc.. Key risk factors include significant leverage (817% debt-to-equity), weak quality scores (16th percentile), low beta of 0.61 — while defensive, this may indicate limited upside participation in bull markets. 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 (817% debt-to-equity); weak quality scores (16th percentile); low beta of 0.61 — while defensive, this may indicate limited upside participation in bull markets. 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 51th percentile and quality factor at the 16th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: a 13.66% 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 Angel Oak Mortgage REIT, Inc.'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 24.2%, and the balance sheet is managed within acceptable parameters (D/E: 817%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; Angel Oak Mortgage REIT, Inc. falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 13.66% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, Angel Oak Mortgage REIT, Inc. receives a Avoid rating with a composite score of 32.3/100 (rank #4351 of 7,333). Our quantitative framework assigns a No Moat (21/100, trend: stable), High uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 29/100.

Our analysis does not support a constructive view on Angel Oak Mortgage REIT, Inc. at this time. The combination of limited competitive advantages, high uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.