Breaking Down Angel Oak Mortgage, Inc. (AOMR) Financial Health: Key Insights for Investors

You're looking at Angel Oak Mortgage, Inc. (AOMR) and trying to reconcile that eye-popping yield with a volatile mREIT (mortgage real estate investment trust) sector, and honestly, you should be. The latest Q3 2025 results, released in early November, show a company actively navigating the high-rate environment, but the numbers reveal a clear split: GAAP net income was strong at $11.4 million, or $0.46 per diluted share, driven by favorable mark-to-market adjustments on their non-QM (non-qualified mortgage) loan portfolio, but the distributable earnings-what really covers the dividend-came in at a tight $0.02 per share, a significant miss against the analyst consensus. Still, the company's strategic shift is clear, with Net Interest Income (NII) for the first nine months of 2025 hitting $30.2 million, an 11.6% jump year-over-year, plus they've maintained the quarterly dividend at $0.32 per share, which translates to a forward yield of around 14.36% as of mid-November 2025. That dividend is the anchor, but you need to understand the gap between the book value of $10.60 and the economic book value of $12.72, and how their recent securitization activity impacts future earnings power, so let's defintely break down what's driving that NII growth and where the real risks to that dividend coverage lie.

Revenue Analysis

You need to know where the money is coming from, and for a mortgage real estate investment trust (REIT) like Angel Oak Mortgage, Inc. (AOMR), that means digging into the spread between what they earn and what they pay-the Net Interest Income (NII). The direct takeaway here is that AOMR's core revenue stream is healthy and growing, driven by strategic portfolio shifts, but total revenue figures can be defintely volatile due to accounting rules.

The company's primary revenue source is Interest Income generated from its portfolio of mortgage-related assets, specifically first lien non-qualified mortgage (non-QM) loans in the U.S. market. AOMR is essentially a sophisticated lender and portfolio manager, so their revenue is the interest they collect from borrowers. For the first nine months of 2025, this total Interest Income reached $104.6 million.

The real performance indicator is the Net Interest Income (NII), which is the interest income minus the interest expense paid on their financing. This metric shows the true profitability of their lending and securitization activities. Here's the quick math on the near-term trend:

• Q3 2025 Net Interest Income: $10.2 million.
• Nine-Month 2025 Net Interest Income: $30.2 million.

This $30.2 million NII for the first nine months of 2025 represents an increase of 11.6% compared to the same period in 2024. That's a solid, double-digit growth rate in their core profit engine, and it shows the strategy is working.

The contribution of different business segments is clear: the vast majority of interest income-and thus NII-comes from their residential mortgage loans in securitization trusts. This is the core business. What this estimate hides, though, is the impact of their securitization strategy (a process where they pool loans and sell bonds backed by them, retaining the most profitable pieces). This is how they manage their balance sheet and funding costs.

A significant change in their revenue stream composition is the aggressive move toward higher-yielding assets. As of September 30, 2025, the weighted average interest rate (coupon) on their residential whole loans portfolio was 7.98%. They've also been calling and retiring older, lower-yielding securitizations and reallocating that capital toward new, higher-yielding investments, a process that drives accretive growth. This capital management is a key opportunity for future revenue expansion. You can read more about this in our full breakdown: Breaking Down Angel Oak Mortgage, Inc. (AOMR) Financial Health: Key Insights for Investors.

This table summarizes the year-over-year improvement in the most relevant revenue metrics:

The 34% jump in Interest Income for Q3 2025 is impressive, but the NII growth of 12.9% tells you the net story, showing that while their interest expense is rising, the income is growing faster. This is the positive spread you want to see in a mortgage REIT.

Profitability Metrics

You want to know if Angel Oak Mortgage, Inc. (AOMR) is a profitable investment, and the short answer for the third quarter of 2025 is yes, but you must look past the standard 'Gross Profit' to understand how a mortgage Real Estate Investment Trust (mREIT) makes money. Their core profitability, the net interest margin, is expanding, and they are defintely managing costs well.

For an mREIT like Angel Oak Mortgage, Inc., the true measure of operational efficiency is the Net Interest Income (NII), which is the difference between the interest they earn on their loans and the interest they pay on their borrowings (cost of funds). This NII is your proxy for Gross Profit. Their Q3 2025 NII was $10.2 million on Interest Income of $36.7 million, which translates to a Net Interest Margin (NIM) of roughly 27.8%. That's a strong NIM in the current rate environment.

Margin Analysis: Net vs. Operating Profit

The bottom-line profitability tells an even better story for Q3 2025. The company reported GAAP Net Income of $11.4 million. Here's the quick math on the key margins, using Interest Income as the revenue base:

• Net Profit Margin: 31.1% ($11.4M Net Income / $36.7M Interest Income).
• Operating Profit Margin: 19.1% ($7.0M Operating Profit / $36.7M Interest Income).

Notice that the Net Income is higher than the NII. That happens because GAAP Net Income includes non-cash items, specifically unrealized gains on their residential loan portfolios and hedge contracts. This is a critical distinction: the $11.4 million net income is boosted by market valuation gains, while the $10.2 million NII reflects the cash-flow engine.

Trends and Operational Efficiency

The trend shows a business that's growing its core income while simultaneously trimming overhead. For the nine months ended September 30, 2025, Angel Oak Mortgage, Inc.'s NII grew by a healthy 11.6% compared to the same period in 2024. The Q3 2025 NII alone was up 12.9% year-over-year. This growth is accretive, meaning it directly adds to shareholder value.

On the expense side, management is showing discipline. Operating expenses, when excluding non-cash stock compensation and securitization costs, were down 13% in Q3 2025 compared to Q3 2024. They are actively managing their capital structure by retiring older, less efficient securitizations and reallocating that capital into higher-yielding investments, a smart move that drives future income. This focus on cost rationalization is a key driver of their improving Operating Profit Margin.

Industry Comparison: AOMR Stands Out

When you stack Angel Oak Mortgage, Inc. against its peers in the mortgage REIT space, its profitability metrics are compelling. The company's Q3 2025 Net Profit Margin of 31.1% is substantially higher than the industry average net margin for mREITs, which typically hovers around 19.6%.

This outperformance is largely due to their specialization in non-qualified mortgage (non-QM) loans, which carry higher yields than agency-backed mortgages, plus those positive unrealized gains. The risk is higher, but so is the potential reward. You can read more about their strategy here: Mission Statement, Vision, & Core Values of Angel Oak Mortgage, Inc. (AOMR).

Here is a snapshot of the core profitability drivers for Q3 2025:

Debt vs. Equity Structure

You need to understand how Angel Oak Mortgage, Inc. (AOMR) funds its assets because its capital structure-the mix of debt and equity-is the core of its risk profile. The takeaway is that while the company's total debt-to-equity ratio looks high at first glance, its strategic focus on non-recourse securitization debt means the more critical recourse debt-to-equity ratio is managed at a much more conservative level.

As of the most recent reporting periods in the 2025 fiscal year, Angel Oak Mortgage, Inc. (AOMR) carried substantial total debt, which is typical for a mortgage real estate investment trust (mREIT). Total debt stood at approximately $2.21 billion, compared to total equity of about $264.2 million. This translates to a total debt-to-equity ratio of roughly 8.38.

Here's the quick math on the debt breakdown from the second quarter of 2025, which gives us a clear picture of its composition:

• Short-Term Debt: Approximately $191.04 million.
• Long-Term Debt: Approximately $1,857 million.

To be fair, simply looking at the total debt-to-equity ratio of 8.38 can be misleading for an mREIT. The industry average for Mortgage REITs is closer to 2.475 to 2.74. The difference lies in the nature of the debt: a significant portion of AOMR's debt is non-recourse, meaning it is tied to specific securitized assets and does not put the company's other assets at risk. This is why the recourse debt-to-equity ratio is the better measure of financial leverage.

The company has defintely prioritized moving assets off its balance sheet through securitization. This is a clear action.

The recourse debt-to-equity ratio has fluctuated significantly this year, reflecting active management and capital markets activity:

• End of Q1 2025: Approximately 2.3x.
• End of Q2 2025: Approximately 1.1x.
• End of Q3 2025: Approximately 1.9x.
• Post-October 2025: Estimated at approximately 1x after factoring in the latest securitization.

This shows a deliberate strategy to reduce the debt that the parent company is directly liable for, keeping it well below the management's stated expected maximum of 2.5x.

The balance between debt and equity funding is heavily weighted toward debt, but it's a dynamic balance managed through frequent capital markets activity. In May 2025, Angel Oak Mortgage, Inc. issued $42.5 million in 9.750% Senior Notes due 2030, raising net proceeds of about $40.6 million for general corporate purposes and new loan acquisitions. However, the primary mechanism for funding and debt management has been non-recourse securitizations (like AOMT 2025-4, 2025-6, and 2025-10) executed throughout 2025, which repay outstanding debt-for example, the October 2025 securitization repaid approximately $237.4 million of debt. While the company itself does not have a readily available corporate credit rating, the securitization trusts it sponsors, such as Angel Oak Mortgage Trust 2025-R1, have received high ratings, including AAA (sf), which speaks to the quality of the underlying mortgage assets. For more on the long-term view, you can check out the Mission Statement, Vision, & Core Values of Angel Oak Mortgage, Inc. (AOMR).

Liquidity and Solvency

You're looking at Angel Oak Mortgage, Inc. (AOMR) and asking the right question: can they meet their short-term obligations and keep growing the portfolio? For a mortgage real estate investment trust (mREIT), liquidity is less about traditional inventory and more about access to capital and managing their debt-to-equity ratio.

The headline liquidity ratios look defintely strong, but you have to understand the context. As of a recent November 2025 report, Angel Oak Mortgage, Inc.'s Current Ratio and Quick Ratio both stood at approximately 6.83. This is an exceptionally high figure, but it reflects the nature of an mREIT's balance sheet, where assets like residential mortgage whole loans are often classified as current due to their potential for securitization or sale, even if they are held for the long term.

Here's the quick math on their immediate cash position: as of September 30, 2025, Angel Oak Mortgage, Inc. held a cash and cash equivalents balance of $51.6 million. That's a solid buffer, but the real story is in their working capital and cash flow management.

Working Capital and Cash Flow Trends

Working capital management for Angel Oak Mortgage, Inc. is fundamentally about managing their loan repurchase agreements (short-term debt) against their loan portfolio. Instead of a steady working capital balance, they rely on strategic capital market activities to generate cash.

Their primary liquidity strength comes from the ability to execute securitizations (pooling loans into bonds for sale) and tap into credit facilities. This is how they turn long-term assets into usable cash. For example, in September 2025, a re-securitization transaction resulted in a release of $19.4 million in cash, which was used for debt repayment and operational purposes. Following the quarter, an October 2025 securitization released another $22.1 million in cash.

The cash flow statement overview shows a company heavily focused on portfolio expansion, which means a consistent drain on cash from investing activities, offset by strategic financing:

• Operating Cash Flow: While Q3 2025 GAAP net income was $11.4 million, the distributable earnings (a better measure of cash available for dividends) was only $0.5 million. This difference suggests a high level of non-cash adjustments, which is common, but it's a key point to watch for dividend sustainability.
• Investing Cash Flow: The trend is clear: aggressive investment. Angel Oak Mortgage, Inc. purchased $237.6 million in newly-originated non-QM residential mortgage loans in Q3 2025 alone. This heavy investment is the engine for future interest income.
• Financing Cash Flow: This is where they fund the investing. The company maintains significant capacity on its loan financing lines, with approximately $707.4 million available as of September 30, 2025. Their recourse debt-to-equity ratio was approximately 1.9x at the end of Q3 2025, which is a manageable leverage level for an mREIT in the current environment.

Liquidity Strengths and Concerns

The biggest strength is their access to capital. The securitization market remains open to them, and they have substantial untapped borrowing capacity. Plus, they recently expanded their capital markets activity by establishing a new $200 million repurchase facility.

The main liquidity concern is the low distributable earnings figure of $0.5 million in Q3 2025. This puts pressure on the dividend, which is a critical component of an mREIT's total return. They rely on the non-cash gains on their portfolio to support the GAAP net income, but cash is what pays the bills and the dividend. For a deeper dive into the company's long-term strategy, you should review their Mission Statement, Vision, & Core Values of Angel Oak Mortgage, Inc. (AOMR).

Valuation Analysis

You want to know if Angel Oak Mortgage, Inc. (AOMR), a real estate investment trust (REIT), is trading at a fair price right now. The short answer is that the market currently sees Angel Oak Mortgage, Inc. as undervalued, but you must look past the headline dividend yield to understand the risk.

As of November 2025, the stock trades around $8.95 per share. Over the last 12 months, the price has actually decreased by 10.16%, a clear signal of market concern, even as the broader market has stabilized. The 52-week trading range of $7.36 to $10.88 shows the stock has not recovered to its recent highs. This is a classic case where a high dividend yield can mask underlying capital depreciation risk.

Here is the quick math on the key valuation multiples based on the most recent 2025 fiscal year data:

• Price-to-Earnings (P/E): The trailing P/E ratio is 12.20, and the forward P/E is significantly lower at 6.93. This forward estimate suggests analysts expect a substantial jump in future earnings, which is a major opportunity if the company can execute.
• Price-to-Book (P/B): With a stock price of approximately $8.95 and a GAAP book value of $10.60 per share as of September 30, 2025, the P/B ratio is roughly 0.84. Trading below book value (a P/B less than 1.0) often signals that the market believes the company's assets are worth less than their stated value, or that the company is undervalued.
• Enterprise Value-to-EBITDA (EV/EBITDA): This metric is less common for mortgage REITs due to their unique capital structure and high leverage. The Enterprise Value is a substantial $2.38 billion, but the EV/EBITDA is not a primary valuation driver here.

Dividend and Payout Sustainability

The dividend yield for Angel Oak Mortgage, Inc. is eye-catching, but the payout ratio is a flashing yellow light. The current annualized dividend is $1.28 per share, which translates to a high dividend yield of approximately 14.3%.

However, the trailing twelve-month (TTM) payout ratio is a high 175% (calculated from the $1.28 annual dividend and the TTM Earnings Per Share (EPS) of $0.73). A payout ratio this high means the company is paying out significantly more in dividends than it is earning. For a REIT, this isn't an immediate death sentence-they are required to distribute at least 90% of their taxable income-but it does raise serious questions about the dividend's long-term sustainability without relying on asset sales or new debt.

Analyst Consensus and Price Target

Wall Street analysts are generally bullish, but the sentiment is mixed enough to warrant caution. The consensus rating is a 'Moderate Buy,' with 4 Buy ratings and 3 Hold ratings from the 7 analysts covering the stock. Nobody is saying 'Sell,' but the 'Hold' ratings suggest a lack of conviction from a significant portion of the coverage.

The average 12-month price target is $11.60, which implies a potential upside of nearly 30% from the current price of $8.95. The range is wide, with a high target of $13.00 and a low of $10.50. This forecast upside is the primary opportunity for investors, but it hinges entirely on the company's ability to close the gap between its dividend payout and its actual distributable earnings. For a deeper dive into the risks, check out our full report on Breaking Down Angel Oak Mortgage, Inc. (AOMR) Financial Health: Key Insights for Investors.

Your next step should defintely be to model a scenario where the dividend is cut to match the TTM EPS of $0.73, and see if the stock price still offers an acceptable total return.

Risk Factors

You're looking at Angel Oak Mortgage, Inc. (AOMR) and seeing the strong net interest income growth-a solid $30.2 million for the first nine months of 2025. But as a seasoned financial analyst, I'm here to map the real-world risks that could derail that trajectory. The core issue is volatility; specifically, the unpredictable nature of interest rates and the market's reaction to earnings misses, which we've seen twice this year.

The biggest near-term risk is the continued disconnect between revenue and distributable earnings (DE). In Q3 2025, Angel Oak Mortgage, Inc. reported GAAP net income of $11.4 million, or $0.46 per diluted share, but distributable earnings were only $529,000. The market focuses on that bottom-line DE number, and the Q3 2025 EPS of just $0.02 per share missed the analyst consensus of $0.28 by a massive 92.86%. That kind of earnings surprise is a red flag for investor confidence.

Here is a quick breakdown of the risks and the company's strategic response:

• Market Risk: Unpredictable interest rate changes affect the value of their non-Qualified Mortgage (non-QM) loan portfolio and the cost of their financing.
• Financial Risk: Persistent earnings per share (EPS) volatility, as seen by the Q2 and Q3 2025 misses.
• Operational Risk: Maintaining sufficient liquidity and successfully executing their securitization strategy in a challenging environment.

Internal and External Pressures

The external risks for Angel Oak Mortgage, Inc. are primarily macroeconomic. They operate in the credit-sensitive non-QM space, so any shift in the Federal Reserve's rate policy or a downturn in the housing market directly impacts their asset valuations and their ability to execute securitizations (converting loans into bonds). This is a constant tightrope walk. Plus, the stock has already lost about 1.4% since the start of 2025, compared to the S&P 500's gain of 15.6%.

Internally, there's a perception issue compounded by financial signals. Insider selling, like the CFO's sale of 50,000 shares for $489,000.00 in September 2025, can defintely rattle investors, even if it's for personal reasons. You have to ask yourself why key executives are reducing their stake when the company touts strategic progress. Also, while Q3 saw a book value increase to $10.60 per share, Q2 saw a decline of 3.1% to $10.37 per share, showing that book value preservation is still a struggle in this environment.

Mitigation Strategies and Clear Actions

The good news is that management is not sitting still; they are actively working to mitigate these risks through smart financial engineering. Their core strategy is to use securitization to manage recourse debt (debt where the company is directly liable) and free up capital for new, higher-yielding loans.

Here's the quick math on their capital management:

• Debt Management: They successfully called and retired two older securitizations in Q3 2025, which released $19.4 million in cash for new investments.
• Funding Cost Reduction: In October 2025, they amended a loan facility, lowering the interest rate spread from a range of 1.75%-3.35% to a new, tighter range of 1.65%-2.40%. This directly improves their net interest margin (NIM).
• Expense Control: Year-to-date through Q3 2025, operating expenses (excluding securitization costs and stock compensation) were 19% lower than in 2024, showing a real focus on cost rationalization.

They are getting better at managing their cost of funds. The recourse debt-to-equity ratio, a key leverage metric, has dropped significantly and is estimated to be around 1x after factoring in the October 2025 securitization, which is a conservative and healthy level for a mortgage real estate investment trust (REIT). For a deeper look at their long-term vision, check out the Mission Statement, Vision, & Core Values of Angel Oak Mortgage, Inc. (AOMR).

Growth Opportunities

You're looking for a clear path to growth for Angel Oak Mortgage, Inc. (AOMR) beyond the recent earnings reports, and honestly, the answer is simple: it's all about their specialized focus on the non-qualified mortgage (non-QM) market and their ability to execute securitizations in a tough environment.

The company is positioned to capitalize on the growing demand from self-employed borrowers and real estate investors who don't fit the traditional agency lending box. This isn't a niche anymore; it's a mainstream necessity. For the nine months ending September 30, 2025, Angel Oak Mortgage, Inc.'s net interest income hit $30.2 million, an 11.6% increase over the same period in 2024, showing their model is working even with higher rates. That's real, tangible growth. Exploring Angel Oak Mortgage, Inc. (AOMR) Investor Profile: Who's Buying and Why?

Key Growth Drivers and Strategic Moves

Angel Oak Mortgage, Inc. isn't just riding the market; they're actively shaping their portfolio for higher returns. A major strategic move was calling and retiring two legacy securitizations-AOMT 2019-2 and AOMT 2019-4-and re-allocating that capital into higher-yielding investments. This proactive management is defintely a core driver.

Plus, they're being smart about capital. They established a new credit facility at attractive rates to diversify their creditor base and reduce future interest expense, and they entered a $200 million repurchase facility with a global investment bank to enhance financial flexibility. This frees up cash to purchase more accretive loans.

• Invest in high-quality loans: Purchased $237.6 million in newly-originated non-QM loans in Q3 2025.
• Execute securitizations: Completed the AOMT 2025-10 securitization, valued at approximately $274.3 million.
• Innovate products: Launched new 5-year and 7-year Adjustable-Rate Mortgage (ARM) products in October 2025.

Revenue and Earnings Outlook

The near-term earnings picture looks strong, assuming market stability. The company's Q3 2025 GAAP net income was $11.4 million, or $0.46 per diluted share. For the full year, analysts are projecting a significant leap in earnings per share (EPS) for the next year, with expectations to grow from a trailing $0.03 to $1.21 per share. Here's the quick math: that's a projected increase of 3,933.33%. What this estimate hides is the potential for market volatility to impact asset valuations, but the direction is clear.

Management expects continued earnings growth, supported by loan production in the mid-to-high 7% range. Their target assets stood at a substantial $2.5 billion as of September 30, 2025.

Competitive Edge in Non-QM

Angel Oak Mortgage, Inc.'s biggest competitive advantage is its integrated platform and deep expertise in the non-QM space. They are not just buying loans; they are credit managers. Their AOMT securitization shelf has demonstrated better delinquency performance compared to peers, which is a direct result of their disciplined credit selection.

The ability to execute securitizations efficiently, even when others hesitate, is a huge differentiator. They successfully executed a $274.3 million securitization in Q3 2025, which is crucial for recycling capital and fueling new loan purchases.