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Annaly Capital (NLY) Q3 Earnings: What's in the Offing?
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Annaly Capital Management Inc. (NLY - Free Report) is scheduled to report third-quarter results on Oct 31, after the market closes. The company’s earnings per share (EPS) is expected to remain flat year over year.
In the last reported quarter, this mortgage real estate investment trust (REIT) posted core earnings of 30 cents per share, handily surpassing the Zacks Consensus Estimate by 3.45%. However, net interest income (NII) of nearly $334.1 million plunged 35% sequentially.
Over the trailing four quarters, the company beat the Zacks Consensus Estimate in three occasions and met in the other. It delivered an average negative surprise of 2.56% during this period.
The graph below depicts this surprise history:
Annaly Capital Management Inc Price, Consensus and EPS Surprise
Let’s see how things are shaping up prior to this announcement.
Factors at Play
Annaly’s investment portfolio involves traditional agency mortgage backed securities (MBSs), as well as investments in more credit-focused asset classes. In fact, increased allocation to credit assets will likely diversify its investment options and diversify risks. Further, expansion of the company’s middle-market lending portfolio might have lent support to the company’s upcoming results.
Encouragingly, the Zacks Consensus Estimate for the company’s third-quarter EPS was revised upward by a cent to 30 cents, over the past week, reflecting analysts’ confidence in the stock.
Also, in September, the company closed on the buyout of MTGE Investment Corp., by completing the pending exchange offer for all outstanding shares of common stock of MTGE. Later, in the same month, it raised fresh capital through a public offering of common stock.
Furthermore, favorable macroeconomic indicators and an encouraging housing market backdrop will likely have buoyed home sales during the quarter under review. This, in turn, is expected to have aided Annaly’s residential financing activities.
Nonetheless, the mortgage industry continues to be challenged by rising mortgage rates and property prices. Specifically, rise in the average mortgage rate for a 30-year fixed-term loan has led to a decline in mortgage origination volumes in the third quarter. Moreover, yield-curve flattening and rising interest rates have significantly compressed margins for loan originators.
Amid these, affordability hurdles and higher borrowing costs have kept home buyers on the sidelines. Also, amid rising interest rates, few borrowers are likely to have taken the opportunity to refinance, and opted to hold onto lower rates of their existing mortgages. These factors might have reduced refinancing loans originated by the company.
Earnings Whispers
Our proven model does not conclusively show that Annaly is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. That is not the case here, as you will see below.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earning ESP: Annaly’s Earnings ESP is +1.12%.
Zacks Rank: The company currently carries a Zacks Rank of 4 (Sell), which actually reduces the predictive power of ESP.
Stocks That Warrant a Look
While the other players in this space are lined up to report financial results, below are three stocks, poised to beat on earnings per the proven Zacks model. You can see the complete list of today’s Zacks #1 Rank stocks here.
Granite Point Mortgage Trust Inc. (GPMT - Free Report) , slated to report third-quarter results on Nov 5, has an Earnings ESP of +1.7% and holds a Zacks Rank of 2.
Hannon Armstrong Sustainable Infrastructure Capital, Inc (HASI - Free Report) , set to release Sep-end quarter figures on Nov 7, has an Earnings ESP of +7.69% and a Zacks Rank of 3.
Two Harbors Investments Corp (TWO - Free Report) , scheduled to report quarterly numbers on Nov 6, has an Earnings ESP of +0.7% and carries a Zacks Rank of 2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Annaly Capital (NLY) Q3 Earnings: What's in the Offing?
Annaly Capital Management Inc. (NLY - Free Report) is scheduled to report third-quarter results on Oct 31, after the market closes. The company’s earnings per share (EPS) is expected to remain flat year over year.
In the last reported quarter, this mortgage real estate investment trust (REIT) posted core earnings of 30 cents per share, handily surpassing the Zacks Consensus Estimate by 3.45%. However, net interest income (NII) of nearly $334.1 million plunged 35% sequentially.
Over the trailing four quarters, the company beat the Zacks Consensus Estimate in three occasions and met in the other. It delivered an average negative surprise of 2.56% during this period.
The graph below depicts this surprise history:
Annaly Capital Management Inc Price, Consensus and EPS Surprise
Annaly Capital Management Inc Price, Consensus and EPS Surprise | Annaly Capital Management Inc Quote
Let’s see how things are shaping up prior to this announcement.
Factors at Play
Annaly’s investment portfolio involves traditional agency mortgage backed securities (MBSs), as well as investments in more credit-focused asset classes. In fact, increased allocation to credit assets will likely diversify its investment options and diversify risks. Further, expansion of the company’s middle-market lending portfolio might have lent support to the company’s upcoming results.
Encouragingly, the Zacks Consensus Estimate for the company’s third-quarter EPS was revised upward by a cent to 30 cents, over the past week, reflecting analysts’ confidence in the stock.
Also, in September, the company closed on the buyout of MTGE Investment Corp., by completing the pending exchange offer for all outstanding shares of common stock of MTGE. Later, in the same month, it raised fresh capital through a public offering of common stock.
Furthermore, favorable macroeconomic indicators and an encouraging housing market backdrop will likely have buoyed home sales during the quarter under review. This, in turn, is expected to have aided Annaly’s residential financing activities.
Nonetheless, the mortgage industry continues to be challenged by rising mortgage rates and property prices. Specifically, rise in the average mortgage rate for a 30-year fixed-term loan has led to a decline in mortgage origination volumes in the third quarter. Moreover, yield-curve flattening and rising interest rates have significantly compressed margins for loan originators.
Amid these, affordability hurdles and higher borrowing costs have kept home buyers on the sidelines. Also, amid rising interest rates, few borrowers are likely to have taken the opportunity to refinance, and opted to hold onto lower rates of their existing mortgages. These factors might have reduced refinancing loans originated by the company.
Earnings Whispers
Our proven model does not conclusively show that Annaly is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. That is not the case here, as you will see below.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earning ESP: Annaly’s Earnings ESP is +1.12%.
Zacks Rank: The company currently carries a Zacks Rank of 4 (Sell), which actually reduces the predictive power of ESP.
Stocks That Warrant a Look
While the other players in this space are lined up to report financial results, below are three stocks, poised to beat on earnings per the proven Zacks model. You can see the complete list of today’s Zacks #1 Rank stocks here.
Granite Point Mortgage Trust Inc. (GPMT - Free Report) , slated to report third-quarter results on Nov 5, has an Earnings ESP of +1.7% and holds a Zacks Rank of 2.
Hannon Armstrong Sustainable Infrastructure Capital, Inc (HASI - Free Report) , set to release Sep-end quarter figures on Nov 7, has an Earnings ESP of +7.69% and a Zacks Rank of 3.
Two Harbors Investments Corp (TWO - Free Report) , scheduled to report quarterly numbers on Nov 6, has an Earnings ESP of +0.7% and carries a Zacks Rank of 2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>