Is Blackstone Mortgage Trust (BXMT) A Bargain After Its Recent Share Price Slide?

Blackstone Mortgage Trust stock reacts to recent performance

Blackstone Mortgage Trust (BXMT) has drawn investor attention after a difficult stretch, with the stock down about 6% over the past month and about 23% over the past 3 months.

The recent weakness fits into a tougher year for Blackstone Mortgage Trust. The share price is down over 20% on a one-year total shareholder return basis, and recent losses have deepened, which suggests investors are reassessing both income prospects and credit risk in its loan portfolio.

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Blackstone Mortgage Trust now trades well below the average analyst price target near US$18.86 after this latest slide. Does that discount reflect real stress in the loan book, or has the stock already moved past fair value?

Most Popular Narrative: 34.6% Undervalued

Blackstone Mortgage Trust last closed at $13.73, while the most followed narrative assigns a fair value of $21.00. That gap is built on a detailed view of earnings power, margins and required returns.

The company is focusing on portfolio turnover through repayments and redeployment into high-quality new credit opportunities, which is expected to enhance future earnings by improving the overall credit composition and potentially increasing revenue from new investments. Resolution of impaired loans is expected to be a catalyst for future growth by reducing the non-performing assets and allowing the company to recapture earnings potential, thereby potentially increasing net margins as capital is redeployed into more productive investments.

Read the complete narrative.

Want to see what sits behind that fair value for Blackstone Mortgage Trust? The narrative emphasizes higher margins, earnings growth and a richer future earnings multiple. The specific revenue path and share count assumptions are just as important. The full breakdown shows exactly how those moving parts fit together.

Result: Fair Value of $21.00 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, you still need to weigh risks such as the remaining US$970 million of impaired loans and potential timing gaps between repayments and new lending for Blackstone Mortgage Trust.

Find out about the key risks to this Blackstone Mortgage Trust narrative.

Another view on Blackstone Mortgage Trust valuation

The fair value narrative for Blackstone Mortgage Trust points to upside, but the current P/S ratio tells a different story. BXMT trades on a P/S of 5.8x compared with 4.5x for the US Mortgage REITs industry and 4.9x for peers, while the fair ratio is 2.2x. That gap suggests meaningful valuation risk if sentiment or earnings expectations shift.

For a clearer sense of how this richer P/S ratio could adjust over time, take a look at the valuation breakdown behind these numbers, including how the fair ratio was calculated, in our detailed review of Blackstone Mortgage Trust. See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

If this mixed picture on Blackstone Mortgage Trust leaves you unsure, you may wish to review the full data and form your own view using 3 key rewards and 2 important warning signs.

Looking for more investment ideas beyond Blackstone Mortgage Trust?

Do not stop your research with Blackstone Mortgage Trust. The next opportunity might fit your portfolio better, and you will only see it if you look wider.

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• Hunt for mispriced quality by scanning 45 high quality undervalued stocks that pair solid fundamentals with share prices that lag underlying performance.
• Protect your downside first by researching a 75 resilient stocks with low risk scores that scores well on balance sheet strength and business stability before you commit new capital.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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