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Chimera Investment Q3 Earnings: Is NYSE:CIM Cheap at 6.9x Forward P/E?

in EARNINGS/INVESTING IDEAS by

Chimera Investment Corporation (NYSE:CIM) is scheduled to report Q3 earnings results on November 4, 2020.

The company is expected to report earnings of $0.31/share on revenue of $115.7 million. The consensus earnings per share (EPS) of $0.31/share is based on a poll of 4 analysts and represents a decline in eps of −38.0% over the same quarter last year, when the company reported earnings of $0.50/share.

The revenue forecast of $115.7 million based on a poll of 3 analysts implies a year-over-year (YoY) decline in revenue of −18.3%. Last year the company reported $141.6 million in revenue for the quarter.

Expected to report EPS contraction of −38.0% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $115.71 $141.59 −18.3%
EPS $0.31 $0.50 −38.0%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 8 tracked quarters, missed 3 quarters, and met expectations 1 quarter.

What are your expectations from Chimera Investment Corporation for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.31 $0.32 4.6% Beat
Q1, 2020 $0.48 $0.57 19.0% Beat
Q4, 2019 $0.52 $0.64 23.6% Beat
Q3, 2019 $0.55 $0.50 −9.8% Missed
Q2, 2019 $0.57 $0.53 −7.6% Missed
Q1, 2019 $0.58 $0.57 −2.2% Missed
Q4, 2018 $0.58 $0.58 0% Met
Q3, 2018 $0.58 $0.60 4.2% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −6.0%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $8.87 $8.34 −6.0% Decline
May 6, 2020 $7.89 $7.95 0.8% Increase
February 12, 2020 $21.36 $22.46 5.1% Increase
October 30, 2019 $20.43 $20.26 −0.8% Decline

Fundamentals And Technical Analysis

Chimera Investment Corporation is currently trading at $8.40/share, down −2.4% for the day. The company is trading at approximately 36.5% of its 52-week high of $22.98/share. The company’s stock price is up 0.8% since the last earnings report and up 0.7% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 48.15 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:CIM Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −7.42 and a forward P/E multiple of 6.92.

Chimera Investment Corporation’s current share price also implies a price-to-book (P/B) multiple of 0.57. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $8.40
P/E Ratio −7.4x
P/E Ratio (Fwd) 6.9x
PEG Ratio 0.0
Total Debt / Total Capital 88.0%
Levered Free Cash Flow $230.2 million
Price To Sales 3.5x

Finbox

Chimera Investment Corporation is a small-cap stock with a market capitalization of $1.998 billion. The company operates in the Financials sector and the Mortgage Real Estate Investment Trusts (REITs) industry.

Chimera Investment Corporation operates as a real estate investment trust in the United States. The company, through its subsidiaries, invests in a portfolio of mortgage assets, including residential mortgage loans, agency and non-agency residential mortgage-backed securities, agency mortgage-backed securities secured by pools of commercial mortgage loans, commercial mortgage loans, and other real estate related securities. It has elected to be taxed as a real estate investment trust. As a result, the company would not be subject to U.S. federal income tax, if it distributes at least 90% of its REIT taxable income to its shareholders. Chimera Investment Corporation was founded in 2007 and is headquartered in New York, New York.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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