Arbor Realty Trust (ABR)

Real estate investment trust Arbor Realty Trust (NYSE:ABR) missed Wall Street’s revenue expectations in Q3 CY2025, with sales falling 28.2% year on year to $112.4 million. Its GAAP profit of $0.20 per share was 6.7% above analysts’ consensus estimates.

Company Overview

With roots dating back to 2003 and a focus on the stability of multifamily housing, Arbor Realty Trust (NYSE:ABR) is a specialized lender that provides financing solutions for multifamily and commercial real estate while also originating and servicing government-backed mortgage loans.

Thrifts & Mortgage Finance institutions operate by accepting deposits and extending loans primarily for residential mortgages, earning revenue through interest rate spreads (difference between lending rates and borrowing costs) and origination fees. The industry benefits from demographic tailwinds as millennials enter prime homebuying age, technological advancements streamlining the loan approval process, and potential interest rate stabilization improving affordability. However, significant headwinds include net interest margin compression during rate volatility, increased competition from fintech disruptors offering digital-first experiences, mounting regulatory compliance costs, and potential housing market corrections that could impact loan portfolios and default rates.

Arbor Realty Trust competes with other commercial mortgage REITs such as Blackstone Mortgage Trust (NYSE:BXMT), Starwood Property Trust (NYSE:STWD), and Ready Capital Corporation (NYSE:RC). In its Agency Business, Arbor faces competition from larger financial institutions like Walker & Dunlop (NYSE:WD) and CBRE Group (NYSE:CBRE).

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions. Luckily, Arbor Realty Trust’s revenue grew at a solid 7.6% compounded annual growth rate over the last five years. Its growth beat the average banking company and shows its offerings resonate with customers.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Arbor Realty Trust’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 14.8% over the last two years. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Arbor Realty Trust missed Wall Street’s estimates and reported a rather uninspiring 28.2% year-on-year revenue decline, generating $112.4 million of revenue.

Net interest income made up 52.5% of the company’s total revenue during the last five years, meaning Arbor Realty Trust’s growth drivers strike a balance between lending and non-lending activities.

Net interest income commands greater market attention due to its reliability and consistency, whereas non-interest income is often seen as lower-quality revenue that lacks the same dependable characteristics.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Arbor Realty Trust, its EPS declined by 2.8% annually over the last five years while its revenue grew by 7.6%. This tells us the company became less profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Arbor Realty Trust, its two-year annual EPS declines of 32.8% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q3, Arbor Realty Trust reported EPS of $0.20, down from $0.31 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 6.7%. Over the next 12 months, Wall Street expects Arbor Realty Trust’s full-year EPS of $0.80 to grow 17.3%.

The balance sheet drives banking profitability since earnings flow from the spread between borrowing and lending rates. As such, valuations for these companies concentrate on capital strength and sustainable equity accumulation potential.

This is why we consider tangible book value per share (TBVPS) the most important metric to track for banks. TBVPS represents the real, liquid net worth per share of a bank, excluding intangible assets that have debatable value upon liquidation. Other (and more commonly known) per-share metrics like EPS can sometimes be murky due to M&A or accounting rules allowing for loan losses to be spread out.

Arbor Realty Trust’s TBVPS grew at a solid 6.2% annual clip over the last five years. On a two-year basis, however, dynamics have changed as TBVPS dropped by 4% annually ($12.62 to $11.63 per share).

Over the next 12 months, Consensus estimates call for Arbor Realty Trust’s TBVPS to shrink by 6.5% to $10.88, a sour projection.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, Arbor Realty Trust has averaged an ROE of 13.2%, excellent for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This is a bright spot for Arbor Realty Trust.

It was good to see Arbor Realty Trust beat analysts’ EPS expectations this quarter. On the other hand, its revenue missed and its net interest income fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock remained flat at $11.52 immediately following the results.

Updated: December 3, 2025 at 11:43 PM EST

Before investing in or passing on Arbor Realty Trust, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

Arbor Realty Trust doesn’t pass our quality test. To begin with, its revenue growth was uninspiring over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its solid ROE suggests it has grown profitably in the past, the downside is its estimated sales for the next 12 months are weak. On top of that, its projected EPS for the next year is lacking.

Arbor Realty Trust’s P/B ratio based on the next 12 months is 0.8x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $10.75 on the company (compared to the current share price of $9.07).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.