A month has gone by since the las t earnings report for Annaly Capital Management (NLY). Shares have added about 0.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Annaly due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recen t earnings report in order to get a better handle on the important drivers.
Annaly Beats Q4 Earnings Estimates, Witnesses Lower NII
Annaly reported fourth-quarter 2018 core earnings, excluding PAA, of 29 cents per share, surpassing the Zacks Consensus Estimate of 28 cents. However, the figure compares unfavorably with the year-ago tally of 31 cents.
Further, NII totaling $272.9 million, witnessed a sequential decline of around 13.5% in the fourth quarter.
For full-year 2018, core earnings, excluding premium amortization adjustment (PAA) of $1.20 surpassed the Zacks Consensus Estimate of $1.18.
However, the figure compares unfavorable with the year-ago tally of $1.22. Further, NII for the year declined 3.6% year over year to $1.4 billion. Quarter in Detail
In the reported quarter, average yield on interest-earning assets (excluding PAA) was 3.38%, up from 3.22% recorded in the previous quarter.
Net interest spread (excluding PAA) of 1.16% for the fourth quarter edged down from 1.14% reported in the prior quarter. Net interest margin (excluding PAA) in the quarter came in at 1.49% compared with 1.50% witnessed in the previous quarter.
The company's investment at fair value of Agency mortgage-backed securities was around $90.7 million as of Dec 31, 2018, up from roughly $89.3 million as of Sep 30, 2018.
Further, Annaly's book value per share came in at $9.39 as of Dec 31, 2018, compared with $10.03 as of Sep 30, 2018. At the end of the fourth quarter, the company's capital ratio was 12.1%, down from 12.6% reported at the end of the last quarter.
Leverage was 6:3:1 as of Dec 31, 2018, compared with 5:9:1 as of Sep 30, 2018. The company offered an annualized core return on average equity of 11.48% in the Dec-end quarter, up from 10.85% in the prior quarter.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
At this time, Annaly has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Annaly has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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