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Annaly Scheduled to Report Q3 Earnings: What's in the Cards?
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Annaly Capital Management Inc. (NLY - Free Report) is scheduled to report third-quarter 2024 results on Oct. 23, after market close. The company’s results are expected to reflect growth in net interest income (NII) and earnings from the year-ago reported figures.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
In the last reported quarter, the mortgage real estate investment trust (mREIT) posted earnings available for distribution per share of 68 cents, which surpassed the Zacks Consensus Estimate. Improvements in the average yield on interest-earning assets supported the results. However, the company registered year-over-year declines in book value per share and the net interest margin.
Annaly has an impressive earnings surprise history. Its earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and matched on one occasion, the average surprise being 2.71%.
Annaly Capital Management Inc Price and EPS Surprise
The mREIT sector witnessed a higher volatility in the fixed-income markets, which is likely to have increased asset impairment risks and hedging mismatches for NLY in the quarter under review.
Nonetheless, a positively sloped yield curve is anticipated to have supported mortgage REITs’ valuations. With a steeper yield curve, mortgage REITs are likely to have witnessed a tangible book value increase as spreads on benchmark indices tightened during the quarter. This is likely to have increased Annaly’s book value per share in the quarter to be reported.
The 30-year fixed mortgage rates decreased to 6.2% at the end of the third quarter from 6.86% in second-quarter 2024 and the high of 7.31% in third-quarter 2023. This is likely to have resulted in a rise in mortgage demand. Yet, origination volumes (particularly purchase originations) remained subdued compared with the prior quarter’s reported levels.
Yet, supported by lower mortgage rates, refinancing activities witnessed a significant surge. Amid this, a large part of AGNC Investment’s mortgage-backed securities holdings is anticipated to have witnessed elevated levels of constant prepayment rates. This is expected to have positively impacted net premium amortization in the third quarter, supporting growth in interest income and average asset yield.
The consensus estimate for third-quarter NII is pegged at $211.8 million, whereas it reported an NII of $53.56 million in the previously reported quarter.
On Sept. 18, the Federal Reserve cut interest rates by 50 basis points to 4.75-5% for the first time since March 2020. However, the Fed kept the interest rates at a 23-year high of 5.25-5.5% during the major part of the quarter. Given this, the company is expected to have seen increased funding costs. This is likely to have hiked costs of interest-bearing liabilities for NLY in the quarter to be reported.
Due to high prepayment speed, the company’s MSR portfolio is likely to have declined, negatively impacting servicing fees. The Zacks Consensus Estimate for net servicing income of $103 million indicates a sequential decline of 3.7%.
What the Zacks Model Reveals for Annaly
Our proven model does not show that an earnings beat is likely for NLY this time around. This is because the company does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: Annaly has an Earnings ESP of 0.00%.
Zacks Rank: Annaly currently carries a Zacks Rank of 4 (Sell).
The Zacks Consensus Estimate for NLY’s third-quarter earnings of 67 cents per share has been unchanged in the past seven days. The figure indicates a rise of 1.5% from the year-ago reported number.
REITs Stocks That Warrant a Look
Two stocks from the broader REIT sector, which you may want to consider, as our model shows that these have the right combination of elements to report a surprise this time around, are American Healthcare REIT Inc. (AHR - Free Report) and Public Storage (PSA - Free Report) .
American Healthcare REIT is scheduled to report third-quarter 2024 results on Nov. 12. AHR has an Earnings ESP of +2.06% and presently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Public Storage is slated to report third-quarter 2024 results on Oct. 30. PSA currently has an Earnings ESP of +0.26% and a Zacks Rank of 3.
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Annaly Scheduled to Report Q3 Earnings: What's in the Cards?
Annaly Capital Management Inc. (NLY - Free Report) is scheduled to report third-quarter 2024 results on Oct. 23, after market close. The company’s results are expected to reflect growth in net interest income (NII) and earnings from the year-ago reported figures.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
In the last reported quarter, the mortgage real estate investment trust (mREIT) posted earnings available for distribution per share of 68 cents, which surpassed the Zacks Consensus Estimate. Improvements in the average yield on interest-earning assets supported the results. However, the company registered year-over-year declines in book value per share and the net interest margin.
Annaly has an impressive earnings surprise history. Its earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and matched on one occasion, the average surprise being 2.71%.
Annaly Capital Management Inc Price and EPS Surprise
Annaly Capital Management Inc price-eps-surprise | Annaly Capital Management Inc Quote
Key Factors & Estimates for NLY in Q3
The mREIT sector witnessed a higher volatility in the fixed-income markets, which is likely to have increased asset impairment risks and hedging mismatches for NLY in the quarter under review.
Nonetheless, a positively sloped yield curve is anticipated to have supported mortgage REITs’ valuations. With a steeper yield curve, mortgage REITs are likely to have witnessed a tangible book value increase as spreads on benchmark indices tightened during the quarter. This is likely to have increased Annaly’s book value per share in the quarter to be reported.
The 30-year fixed mortgage rates decreased to 6.2% at the end of the third quarter from 6.86% in second-quarter 2024 and the high of 7.31% in third-quarter 2023. This is likely to have resulted in a rise in mortgage demand. Yet, origination volumes (particularly purchase originations) remained subdued compared with the prior quarter’s reported levels.
Yet, supported by lower mortgage rates, refinancing activities witnessed a significant surge. Amid this, a large part of AGNC Investment’s mortgage-backed securities holdings is anticipated to have witnessed elevated levels of constant prepayment rates. This is expected to have positively impacted net premium amortization in the third quarter, supporting growth in interest income and average asset yield.
The consensus estimate for third-quarter NII is pegged at $211.8 million, whereas it reported an NII of $53.56 million in the previously reported quarter.
On Sept. 18, the Federal Reserve cut interest rates by 50 basis points to 4.75-5% for the first time since March 2020. However, the Fed kept the interest rates at a 23-year high of 5.25-5.5% during the major part of the quarter. Given this, the company is expected to have seen increased funding costs. This is likely to have hiked costs of interest-bearing liabilities for NLY in the quarter to be reported.
Due to high prepayment speed, the company’s MSR portfolio is likely to have declined, negatively impacting servicing fees. The Zacks Consensus Estimate for net servicing income of $103 million indicates a sequential decline of 3.7%.
What the Zacks Model Reveals for Annaly
Our proven model does not show that an earnings beat is likely for NLY this time around. This is because the company does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: Annaly has an Earnings ESP of 0.00%.
Zacks Rank: Annaly currently carries a Zacks Rank of 4 (Sell).
The Zacks Consensus Estimate for NLY’s third-quarter earnings of 67 cents per share has been unchanged in the past seven days. The figure indicates a rise of 1.5% from the year-ago reported number.
REITs Stocks That Warrant a Look
Two stocks from the broader REIT sector, which you may want to consider, as our model shows that these have the right combination of elements to report a surprise this time around, are American Healthcare REIT Inc. (AHR - Free Report) and Public Storage (PSA - Free Report) .
American Healthcare REIT is scheduled to report third-quarter 2024 results on Nov. 12. AHR has an Earnings ESP of +2.06% and presently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Public Storage is slated to report third-quarter 2024 results on Oct. 30. PSA currently has an Earnings ESP of +0.26% and a Zacks Rank of 3.