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Invesco Mortgage (IVR) to Post Q2 Earnings: What's in Store?
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Invesco Mortgage Capital Inc. (IVR - Free Report) is scheduled to report second-quarter results on Aug 8, after market close. The company’s quarterly earnings available for distribution per common share are expected to have declined year over year.
In the last reported quarter, this mortgage real estate investment trust (mREIT), which invests in finances and manages mortgage-backed securities (MBS) and other mortgage-related assets, posted earnings available for distribution per common share of 86 cents. The metric missed the Zacks Consensus Estimate of $1.06. Also, its net interest income witnessed a decline year over year.
Notably, IVR has a decent earnings surprise history. It surpassed estimates in two of the trailing four quarters and missed twice, delivering an average earnings surprise of 4.18%.
Let’s see how things have shaped up before the second-quarter results.
INVESCO MORTGAGE CAPITAL INC Price and EPS Surprise
The mREIT sector witnessed a favorable scenario in the second quarter, owing to the lower volatility in the fixed-income markets. This is likely to have driven mortgage spreads tighter, thus improving IVR’s book value per share.
At the end of the first quarter of 2024, 94.3% of the company’s $5-billion portfolio was invested in Agency RMBS. Given the lower interest rate volatility, higher-coupon Agency RMBS is expected to have witnessed a decent performance in the second quarter of 2024.
The Federal Reserve kept the interest rates steady during the quarter at a 23-year high of 5.25-5.5%. Given the high interest rates in the quarter, the company is expected to have seen higher funding costs. This is likely to have affected net interest income growth in the quarter under review.
In the second quarter, mortgage rates dropped slightly, with the rate on a 30-year fixed mortgage declining to 6.7% in June from 6.8% at the beginning of April. This is likely to have resulted in a marginal rise in mortgage demand. Yet, origination volumes (particularly purchase originations) are expected to have remained lower than the prior quarter’s reported figure due to home price appreciation.
Yet, supported by lower mortgage rates, there is a likelihood of a modest improvement in refinancing activities. Amid this, a significant portion of IVR’s (mortgage-backed securities) MBS holdings are anticipated to have witnessed elevated levels of constant prepayment rate. This is expected to have resulted in a modest uptick in mortgage servicing rights amortization in the quarter under review.
Before the second-quarter earnings release, there was a lack of any solid catalyst for becoming overly optimistic about the company’s business activities and prospects. The Zacks Consensus Estimate for second-quarter earnings has remained unchanged at 75 cents over the past month. It suggests a decline of 48.3% from the year-ago quarter’s reported figure.
What Our Quantitative Model Predicts
According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Invesco Mortgage is 0.00%.
Starwood Property Trust, Inc. (STWD - Free Report) is slated to post quarterly results on Aug 6.
In the past month, the Zacks Consensus Estimate for STWD’s quarterly earnings has been unchanged at 48 cents per share, indicating a decline of 2.04% from the prior-year quarter’s reported figure.
Apollo Commercial Real Estate Finance, Inc. (ARI - Free Report) is slated to post quarterly results on Aug 6.
In the past month, the Zacks Consensus Estimate for ARI’s quarterly earnings has been unchanged at 34 cents per share, indicating a significant decline from the prior-year quarter’s reported figure.
Image: Bigstock
Invesco Mortgage (IVR) to Post Q2 Earnings: What's in Store?
Invesco Mortgage Capital Inc. (IVR - Free Report) is scheduled to report second-quarter results on Aug 8, after market close. The company’s quarterly earnings available for distribution per common share are expected to have declined year over year.
In the last reported quarter, this mortgage real estate investment trust (mREIT), which invests in finances and manages mortgage-backed securities (MBS) and other mortgage-related assets, posted earnings available for distribution per common share of 86 cents. The metric missed the Zacks Consensus Estimate of $1.06. Also, its net interest income witnessed a decline year over year.
Notably, IVR has a decent earnings surprise history. It surpassed estimates in two of the trailing four quarters and missed twice, delivering an average earnings surprise of 4.18%.
Let’s see how things have shaped up before the second-quarter results.
INVESCO MORTGAGE CAPITAL INC Price and EPS Surprise
INVESCO MORTGAGE CAPITAL INC price-eps-surprise | INVESCO MORTGAGE CAPITAL INC Quote
Factors at Play
The mREIT sector witnessed a favorable scenario in the second quarter, owing to the lower volatility in the fixed-income markets. This is likely to have driven mortgage spreads tighter, thus improving IVR’s book value per share.
At the end of the first quarter of 2024, 94.3% of the company’s $5-billion portfolio was invested in Agency RMBS. Given the lower interest rate volatility, higher-coupon Agency RMBS is expected to have witnessed a decent performance in the second quarter of 2024.
The Federal Reserve kept the interest rates steady during the quarter at a 23-year high of 5.25-5.5%. Given the high interest rates in the quarter, the company is expected to have seen higher funding costs. This is likely to have affected net interest income growth in the quarter under review.
In the second quarter, mortgage rates dropped slightly, with the rate on a 30-year fixed mortgage declining to 6.7% in June from 6.8% at the beginning of April. This is likely to have resulted in a marginal rise in mortgage demand. Yet, origination volumes (particularly purchase originations) are expected to have remained lower than the prior quarter’s reported figure due to home price appreciation.
Yet, supported by lower mortgage rates, there is a likelihood of a modest improvement in refinancing activities. Amid this, a significant portion of IVR’s (mortgage-backed securities) MBS holdings are anticipated to have witnessed elevated levels of constant prepayment rate. This is expected to have resulted in a modest uptick in mortgage servicing rights amortization in the quarter under review.
Before the second-quarter earnings release, there was a lack of any solid catalyst for becoming overly optimistic about the company’s business activities and prospects. The Zacks Consensus Estimate for second-quarter earnings has remained unchanged at 75 cents over the past month. It suggests a decline of 48.3% from the year-ago quarter’s reported figure.
What Our Quantitative Model Predicts
According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Invesco Mortgage is 0.00%.
Zacks Rank: Invesco Mortgage currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Release Dates of Other REITs
Starwood Property Trust, Inc. (STWD - Free Report) is slated to post quarterly results on Aug 6.
In the past month, the Zacks Consensus Estimate for STWD’s quarterly earnings has been unchanged at 48 cents per share, indicating a decline of 2.04% from the prior-year quarter’s reported figure.
Apollo Commercial Real Estate Finance, Inc. (ARI - Free Report) is slated to post quarterly results on Aug 6.
In the past month, the Zacks Consensus Estimate for ARI’s quarterly earnings has been unchanged at 34 cents per share, indicating a significant decline from the prior-year quarter’s reported figure.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.