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Chimera (CIM) to Report Q2 Earnings: What's in the Cards?
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Chimera Investment Corporation (CIM - Free Report) is scheduled to report second-quarter 2024 results on Aug 7, before the opening bell. The company’s quarterly net interest income (NII) is expected to improve. However, earnings per share (EPS) are likely to have declined year over year.
In the last reported quarter, the mortgage real estate investment trust reported core earnings of 12 cents per share, surpassing the Zacks Consensus Estimate of 10 cents. Robust net realized gains on sales of investments drove the bottom-line performance.
Over the trailing four quarters, the company’s earnings surpassed the Zacks Consensus Estimate on two occasions, missed on one and were in line on the remaining one occasion — the earnings surprise being 2.08%, on average. The graph below depicts this surprise history:
Chimera Investment Corporation Price and EPS Surprise
The housing market continued to be resilient. In the second quarter, mortgage rates decreased marginally, with the rate on a 30-year fixed mortgage declining to 6.7% in June from 6.8% at the start of April. This is likely to have resulted in a slight rise in mortgage demand. CIM’s second-quarter performance is likely to reflect the favorable impact of this backdrop.
The securitization of assets is a crucial component of the company’s business model, offering low-cost, long-term, non-recourse debt for mortgage assets on its balance sheet. During the first-quarter 2024 update, management stated that 16 asset securitizations are currently callable and 4 more will be callable later in 2024. This is expected to have helped comapny in enjoying durable portfolio interest income during April-June quarter.
The second quarter witnessed high rate and spread volatility, while prepayment remained elevated amid low rates. MBS spreads to benchmark rates also widened, which led to a challenging environment for Agency securities. Given CIM’s significant exposure to Agency securities, this is likely to have hindered asset yields and valuations.
Given the Fed’s high interest rates, the company’s bottom line is likely to have been affected by high funding costs. This is anticipated to have dented its net interest margin.
Amid the concerns, the company is expected to have focused on commercial real estate securities as transaction volume increased, propelled by low rates, favorable loan spreads, high liquidity in the market and improving real estate fundamentals.
Before the second-quarter earnings release, the company’s quarterly activities were inadequate to gain analyst confidence. The Zacks Consensus Estimate for the company’s EPS has been unchanged at 34 cents in the past month. It also suggests growth of 5.6% from the year-ago reported figure.
Here is what our quantitative model predicts:
Chimera does not have the right combination of 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’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Chimera 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, indicating a decline of 2.04% from the prior-year quarter’s reported figure.
Invesco Mortgage Capital Inc. (IVR - Free Report) is slated to post quarterly results on Aug 8.
In the past month, the Zacks Consensus Estimate for IVR’s quarterly earnings has been unchanged at 75 cents, indicating a decline of 48.3% from the prior-year quarter’s reported figure.
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Chimera (CIM) to Report Q2 Earnings: What's in the Cards?
Chimera Investment Corporation (CIM - Free Report) is scheduled to report second-quarter 2024 results on Aug 7, before the opening bell. The company’s quarterly net interest income (NII) is expected to improve. However, earnings per share (EPS) are likely to have declined year over year.
In the last reported quarter, the mortgage real estate investment trust reported core earnings of 12 cents per share, surpassing the Zacks Consensus Estimate of 10 cents. Robust net realized gains on sales of investments drove the bottom-line performance.
Over the trailing four quarters, the company’s earnings surpassed the Zacks Consensus Estimate on two occasions, missed on one and were in line on the remaining one occasion — the earnings surprise being 2.08%, on average. The graph below depicts this surprise history:
Chimera Investment Corporation Price and EPS Surprise
Chimera Investment Corporation price-eps-surprise | Chimera Investment Corporation Quote
Factors to Note
The housing market continued to be resilient. In the second quarter, mortgage rates decreased marginally, with the rate on a 30-year fixed mortgage declining to 6.7% in June from 6.8% at the start of April. This is likely to have resulted in a slight rise in mortgage demand. CIM’s second-quarter performance is likely to reflect the favorable impact of this backdrop.
The securitization of assets is a crucial component of the company’s business model, offering low-cost, long-term, non-recourse debt for mortgage assets on its balance sheet. During the first-quarter 2024 update, management stated that 16 asset securitizations are currently callable and 4 more will be callable later in 2024. This is expected to have helped comapny in enjoying durable portfolio interest income during April-June quarter.
The second quarter witnessed high rate and spread volatility, while prepayment remained elevated amid low rates. MBS spreads to benchmark rates also widened, which led to a challenging environment for Agency securities. Given CIM’s significant exposure to Agency securities, this is likely to have hindered asset yields and valuations.
Given the Fed’s high interest rates, the company’s bottom line is likely to have been affected by high funding costs. This is anticipated to have dented its net interest margin.
Amid the concerns, the company is expected to have focused on commercial real estate securities as transaction volume increased, propelled by low rates, favorable loan spreads, high liquidity in the market and improving real estate fundamentals.
Before the second-quarter earnings release, the company’s quarterly activities were inadequate to gain analyst confidence. The Zacks Consensus Estimate for the company’s EPS has been unchanged at 34 cents in the past month. It also suggests growth of 5.6% from the year-ago reported figure.
Here is what our quantitative model predicts:
Chimera does not have the right combination of 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’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Chimera is 0.00%.
Zacks Rank: Chimera carries a Zacks Rank #3.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming 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, indicating a decline of 2.04% from the prior-year quarter’s reported figure.
Invesco Mortgage Capital Inc. (IVR - Free Report) is slated to post quarterly results on Aug 8.
In the past month, the Zacks Consensus Estimate for IVR’s quarterly earnings has been unchanged at 75 cents, indicating a decline of 48.3% from the prior-year quarter’s reported figure.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.