What is WMC's Intrinsic value?

Western Asset Mortgage Capital Corp (WMC) Intrinsic Value Analysis

Executive Summary

As of June 14, 2025, Western Asset Mortgage Capital Corp's estimated intrinsic value ranges from $0.00 to $0.00 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside

Is Western Asset Mortgage Capital Corp (WMC) undervalued or overvalued?

With the current market price at $9.18, the stock appears to be significantly overvalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Western Asset Mortgage Capital Corp's intrinsic value, including:

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.61 0.87
Cost of equity 6.7% 9.8%
Cost of debt 4.0% 7.0%
Tax rate 0.2% 0.8%
Debt/Equity ratio 42.05 42.05
After-tax WACC 4.1% 7.0%

Valuation Methods

Key Financial Metrics

Metric Value
Market Capitalization $56M
Enterprise Value $2170M
Trailing P/E 0.00
Forward P/E -4.80
Trailing EV/EBITDA 25.70
Current Dividend Yield 1628.77%
Dividend Growth Rate (5Y) -32.88%
Debt-to-Equity Ratio 42.05

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Weighted Average 100% $0.00

Investment Conclusion

Based on our comprehensive valuation analysis, Western Asset Mortgage Capital Corp's weighted average intrinsic value is $0.00, which is approximately 100.0% below the current market price of $9.18.

Key investment considerations:

  • Strong projected earnings growth (-115% to -64% margin)
  • Consistent cash flow generation

Given these factors, we believe Western Asset Mortgage Capital Corp is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.