Company Overview
The First Trust Mortgage Income Fund operates as a closed-ended fixed income mutual fund dedicated to investing in fixed income securities, specifically including mortgage-backed securities within the financial services sector. As an asset management entity, the fund functions within the broader asset management industry, seeking to generate income through these specific fixed income instruments. The company's current market capitalization stands at $48.85M, reflecting its position as a smaller-scale player in the fixed income landscape, with an annual revenue of $3.49M. The absence of specific employee count data suggests the operational structure relies on the expertise of its management team rather than a large workforce. This limited market cap and modest revenue indicate that the fund occupies a niche role, likely catering to a specific segment of investors seeking exposure to mortgage-related fixed income assets without the scale of larger mutual fund structures.
Financial Health
The fund reported a revenue of $3.49M over the trailing twelve months, while generating a net income of $4.55M, indicating a financial structure where net income significantly exceeds revenue. The EBITDA figure is not available in the provided data, preventing a direct comparison between operating earnings before interest and taxes and the reported bottom line. The gap between the $3.49M revenue and the $4.55M net income reveals a cost structure where accounting adjustments, such as non-cash items or specific fund accounting treatments, allow net income to be higher than the gross revenue generated. Regarding cash flow and flexibility, the free cash flow metric is not reported, which limits the ability to assess immediate liquidity from operations without relying on the net income figure as a proxy. The gross margin is recorded at 100.0%, suggesting that the cost of goods sold is negligible or handled differently in this asset management context. The operating margin stands at 81.6%, demonstrating that the majority of revenue contributes to covering operating expenses before interest and taxes. Furthermore, the profit margin is listed at 130.5%, a figure that indicates the net income exceeds the revenue base, a characteristic often seen in asset management funds due to fee structures and accounting methodologies. Total cash and total debt figures are both unavailable, making it impossible to calculate the debt-to-equity ratio or determine if the balance sheet is conservative or leveraged based on absolute dollar amounts. However, the current ratio is 2.25, which indicates that the fund holds sufficient current assets to cover its current liabilities more than twice over, pointing to strong short-term liquidity management. The Return on Equity is 8.5%, while the Return on Assets is 3.1%, revealing that the management effectiveness in generating returns for shareholders relative to equity is higher than the returns generated on the total asset base.
Valuation Assessment
The trailing twelve-month P/E ratio is 10.74, whereas the forward P/E is not available, implying that analysts or the market may not have a consensus view on future earnings growth sufficient to calculate a forward multiple. The price-to-book ratio is 0.90, indicating that the market values the fund at 90% of its book value, suggesting it trades at a discount to its net asset value. The price-to-sales ratio is 14.00, a metric that, when viewed alongside the high profit margin, suggests the market places a premium on the revenue generation capabilities despite the low price-to-book multiple. The EV/EBITDA multiple is not available, preventing a valuation assessment based on enterprise value relative to operating earnings. The 52-week high is $12.39 and the 52-week low is $11.40; without the current price explicitly stated in the source facts, the precise percentage deviation cannot be calculated, but the range defines the recent volatility corridor. The beta is 0.26, which indicates that the fund's price volatility is significantly lower than the broader market, suggesting it is less sensitive to general market movements.
Growth & Income
Revenue growth year-over-year is -11.6%, and earnings growth year-over-year is -30.2%, demonstrating that earnings are contracting at a faster rate than revenue. This divergence implies that the decline in profitability is not solely driven by revenue contraction but may be influenced by increases in operating costs or changes in fund accounting. The dividend yield is 7.0%, and the payout ratio is 79.6%, indicating that the fund distributes a substantial portion of its earnings to shareholders. Given the high payout ratio combined with negative earnings growth, the sustainability of the dividend relies on the stability of the fund's net asset value and fee income rather than growing earnings. Since the payout ratio exceeds the earnings growth rate, the distribution is being maintained despite the decline in earnings, which requires careful monitoring of the underlying asset quality. The overall growth and income profile is characterized by negative earnings growth, a high dividend yield, and low price volatility relative to the broader market.