MeritValue

TWO HARBORS INVESTMENT CORP.

TWOdata completeness 88%17 fiscal years on file

Data notes: no data for concept 'capex'

The thesis, from the filings

TWO HARBORS INVESTMENT CORP. earns about 24% on invested capital, but has diluted owners by 40% over 5 years — worth asking whether the growth reaches owners. The applicable estimate puts fair value near $18.64 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$168.6M1$295.5M2$480.4M3$450.2M3$412M3
Net income$187.2M4$220.2M5−$106.4M6$298.2M6−$454.3M6
Operating cash flow$423.5M7$623.4M8$343.5M9$201M9$88.9M9
Capital expenditure—————
Free cash flow (derived)—————
Total debt————$8.56B10
Cash & equivalents$1.15B11$683.5M12$729.7M13$504.6M14$842.3M14
Diluted shares74.5M96.1M95.7M113.1M104.1M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$171.73
your share of equity
Profit it earned you last year
−$43.64
Free cash flow it threw off
—
Debt you’d be carrying
$821.92

10 shares is a claim on $171.73 of net worth that earned you −$43.64 last year, against $821.92 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
24% avg · 5y
FY21 17%FY22 26%FY23 30%FY24 51%FY25 -4%

It earned an average 24% on invested capital over 5 years. Compare that to what it costs to fund the business.

seeing a moat in the numbers →
Management signal · capital allocation
+40% shares · 5y

Share count is up 40% over 5 years — owners have been diluted. Worth asking what they got for it. Total debt has held roughly steady.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0
DCF · Growth Exit 10Y
not applicable
only 0 years of FCF (need ≥3) — model not applicable
DCF · Growth Exit 5Y
not applicable
only 0 years of FCF (need ≥3) — model not applicable
Earnings Power Value
$18.64
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$187.2M
  • growthAssumed0.0%
Graham Number
not applicable
diluted EPS missing or non-positive — Graham Number undefined

Different models answer different questions — which to trust when →

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0001465740-24-000076 (InterestAndDividendIncomeOperating)
  2. 10-K · period ending 2022-12-31 · accession 0001465740-25-000083 (InterestAndDividendIncomeOperating)
  3. 10-K · period ending 2023-12-31 · accession 0001465740-26-000009 (InterestAndDividendIncomeOperating)
  4. 10-K · period ending 2021-12-31 · accession 0001465740-24-000076 (NetIncomeLoss)
  5. 10-K · period ending 2022-12-31 · accession 0001465740-25-000083 (NetIncomeLoss)
  6. 10-K · period ending 2023-12-31 · accession 0001465740-26-000009 (NetIncomeLoss)
  7. 10-K · period ending 2021-12-31 · accession 0001465740-24-000076 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-12-31 · accession 0001465740-25-000083 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-12-31 · accession 0001465740-26-000009 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2025-12-31 · accession 0001465740-26-000009 (LongTermDebt)
  11. 10-K · period ending 2021-12-31 · accession 0001465740-23-000055 (CashAndCashEquivalentsAtCarryingValue)
  12. 10-K · period ending 2022-12-31 · accession 0001465740-24-000076 (CashAndCashEquivalentsAtCarryingValue)
  13. 10-K · period ending 2023-12-31 · accession 0001465740-25-000083 (CashAndCashEquivalentsAtCarryingValue)
  14. 10-K · period ending 2024-12-31 · accession 0001465740-26-000009 (CashAndCashEquivalentsAtCarryingValue)