American Capital Agency Corp.

Company Description

American Capital Agency Corp. operates as a real estate investment trust that invests in pass through securities and collateralized mortgage obligations in which the principal and interest payments are guaranteed by the US government. The company was founded in 2008 and has a market cap of $533 million.

With the economy showing signs of improvement on the heels of stability in the hosing market, shares of AGNC have been posting big gains over the last few months. The company's solid second-quarter results, reported on July 29, helped drive momentum forward.

Second-Quarter Results

For the quarter, American Capital declared a dividend of $1.50 per share, while reporting net income of $30.4 million. The company noted that its average net interest rate spread for the quarter was 3.55%.

CIO Speak

Chief investment officer Gary Clein provided some interesting details about the company's results, saying that "Our results for the quarter benefited from several factors, including slower than expected prepayment speeds, a larger investment portfolio, lower funding costs and improved valuations on higher coupon agency securities."

Estimates Rising

Estimates have been steadily rising over the last few months, with the current year adding $1.96 and climbing to $4.52 per share.

Valuation

Based upon this earnings projection, this stocks trades with a P/E multiple of just 6.4X, a discount to the overall market but also a signal that investors are placing a risk premium into shares due to ongoing uncertainty in housing and lending.

The Chart

Shares of STEC just hit another 52-week high after posting big gains for most of the last 6 months. Take a look below.

Read the full analyst report on AGNC