AGNC Investment (AGNC) reported second quarter 2026 earnings that shifted from a net loss a year ago to net income of US$654 million, a key update for income focused mortgage REIT investors.

AGNC Investment's recent earnings release comes after a mixed price stretch, with the share price down 5.3% over the past week but showing a 3.3% share price gain over the past month. The 1 year total shareholder return of 28.4% and 3 year total shareholder return of 58.8% point to stronger longer run performance and shifting expectations around income and risk.

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After AGNC Investment's earnings driven move and recent share pullback, the stock sits only slightly below the average analyst target, but at a much wider discount to some intrinsic value estimates. This raises the question of where fair value really lies now.

Preferred P/E of 6x: Is it justified?

AGNC Investment last closed at $10.72 and screens as inexpensive on earnings, with the stock trading at a P/E of 6x compared with peers and the wider Mortgage REITs industry.

The P/E ratio compares the share price to earnings per share. A lower figure can signal that the market is pricing in more conservative earnings ahead, or that investors are demanding a higher return for taking on the risk profile of the business.

Here, AGNC's P/E of 6x sits well below the peer average of 9.9x and the US Mortgage REITs industry average of 10.3x. This indicates that the market is valuing AGNC's earnings at a clear discount. Relative to an estimated fair P/E of 11.1x, the current multiple is also well under the level the market could potentially move toward if sentiment and assumptions converged with that fair ratio.

Result: Price-to-Earnings of 6x (UNDERVALUED)

However, AGNC Investment still faces risks, including annual revenue and net income declines. Any further share price weakness could challenge the current value thesis.

Another view: DCF suggests a wider gap

While AGNC Investment looks inexpensive on a P/E of 6x, the SWS DCF model paints an even starker picture, with the stock at $10.72 compared with an estimated future cash flow value of $17.95, or around 40% below that figure. If both are right, how long can this gap stay open?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out AGNC Investment for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 47 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If AGNC Investment's mix of risks and rewards feels finely balanced, check the numbers yourself and decide where you stand, starting with the 3 key rewards and 4 important warning signs.

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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.