Blackstone Mortgage Trust (BXMT) Stock Looks Fully Priced With Weak Returns And Rich Earnings
Blackstone Mortgage Trust stock has fallen about 14.3% year to date, yet on current checks it still trades at a premium, with both the Excess Returns intrinsic value estimate and traditional earnings multiples pointing to the shares being overvalued rather than outright cheap.
- Year to date, Blackstone Mortgage Trust is down about 14.3%, which raises the question of whether the recent weakness has actually made the stock any more attractive on price.
- The company’s ability to generate consistent interest income from its mortgage portfolio can support valuation, while exposure to credit quality and refinancing risk may weigh on how much investors are willing to pay for that income stream.
- Blackstone Mortgage Trust currently passes only 1 of 6 valuation checks, which suggests the stock leans expensive rather than standing out as a clear bargain.
The issue now is whether that premium is justified by the risk and return profile investors are taking on at today’s price.
Does Blackstone Mortgage Trust Look Pricey on Excess Returns?
The Excess Returns model looks at how efficiently Blackstone Mortgage Trust turns its equity base into earnings after factoring in the cost of that equity. For Blackstone Mortgage Trust, book value sits at $19.96 per share and stable EPS is estimated at $1.47 per share, against a cost of equity of $1.83 per share. That gap results in an excess return of a loss of $0.36 per share, indicating that expected returns on equity, averaging 7.51%, do not fully clear the implied equity charge in this framework.
With stable book value projected at $19.63 per share, the Excess Returns model converts these inputs into an intrinsic value estimate of $13.46 per share. Compared with the current share price, this implies the stock trades at about a 24.0% premium to its modeled intrinsic value. On this measure, Blackstone Mortgage Trust screens as expensive rather than aligned with underlying excess returns.
Overall, the Excess Returns work suggests Blackstone Mortgage Trust currently looks overvalued relative to its modeled intrinsic value.
Our Excess Returns analysis suggests Blackstone Mortgage Trust may be overvalued by 24.0%. Discover 49 high quality undervalued stocks or create your own screener to find better value opportunities.
Does Blackstone Mortgage Trust Look Pricey on Earnings?
P/E is a useful yardstick for Blackstone Mortgage Trust because earnings are a primary driver of return for mortgage REIT shareholders. On this measure, the stock trades on a P/E of about 27.6x, compared with an industry average for Mortgage REITs of roughly 9.5x and a broader peer average of about 15.6x. That places Blackstone Mortgage Trust at a clear premium to both its sector and close peers.
A tailored “fair” P/E ratio for Blackstone Mortgage Trust, which factors in elements such as size, risk profile and earnings quality, sits around 17.6x. The gap between the current 27.6x and this fair level is wide, suggesting investors are paying a higher price for each dollar of earnings than the model implies is warranted. While some investors may see reasons to accept that premium, the P/E framework on its own points to a rich valuation.
On the P/E multiple, Blackstone Mortgage Trust stock screens as overvalued relative to both tailored and industry benchmarks.
See what the numbers say about this price — find out in our valuation breakdown.
The Blackstone Mortgage Trust Narrative: What Would Justify Today's Price?
Simply Wall St Narratives for Blackstone Mortgage Trust are designed to connect the valuation puzzle above with clear, testable stories about what would need to happen to the company’s earnings power for today’s price to look high or low. Each one links its number to a specific view on how Blackstone Mortgage Trust's growth, margins and risks might evolve so you can come back to that view as new information emerges, all hosted on Simply Wall St's Community page.
Share a Narrative on Blackstone Mortgage Trust in the Simply Wall St community to put a clear, number driven view on where its growth, margins and execution go from here.
It is a chance to add your voice, set out your own price and earnings case, and then track how it holds up as new results and information come through.
Do you think there's more to the story for Blackstone Mortgage Trust? Head over to our Community to see what others are saying!
The Bottom Line
For Blackstone Mortgage Trust, both the Excess Returns intrinsic value estimate and the P/E comparison point in the same direction, and the stock currently screens as overvalued rather than a clear bargain. The key judgment from here is whether the income stream from its mortgage portfolio is resilient enough, and perceived as low risk enough, to justify paying a premium to intrinsic value and sector multiples. The crux of the bull versus bear debate is how investors weigh that income against credit quality and refinancing risk, and whether the current premium leaves enough room for those risks to be rewarded.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com