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Here's Why AGNC Investment Deserves a Place in Your Portfolio
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AGNC Investment Corp. (AGNC - Free Report) is a promising stock right now, backed by its investment portfolio-repositioning efforts and strong financial position, which place it well for growth. Further, earnings growth prospects and industry tailwinds make it an attractive pick.
The company reported second-quarter 2020 net spread and dollar-roll income (excluding estimated catch-up premium amortization cost) of 58 cents per share, beating the Zacks Consensus Estimate of 46 cents. Net interest income (NII) of $295 million grew from the prior-year quarter’s $123 million.Also, as of Jun 30, 2020, its tangible net book value per share was $14.92, up 9.5% from $13.62 as of Mar 31, 2020.
It has a trailing four-quarter earnings surprise of 14.6%, on average.
Shares of this Zacks Rank #2 (Buy) company have lost 4.9% over the past year compared with the industry’s decline of 29.8%.
Notably, AGNC Investment has a number of other aspects that make it a solid investment choice.
Prudent Asset-Selection Efforts: The company adheres to an active portfolio-management policy to adjust its portfolio and hedges amid a varying interest rate and mortgage market environment. Over the past few quarters, it has shifted focus from generic higher-coupon mortgage-backed securities (MBS) to lower coupon ones. Moreover, it continued its higher-coupon specified-pool MBS strategy that in the current scenario offers greater stability of cash flows and favorable prepayment characteristics. Such prudent steps taken in the early market-recovery phase positioned the company’s investment portfolio well to capitalize on the opportunities and deliver compelling returns.
Decent Financial Position: AGNC Investment’s liquidity as of Jun 30, 2020, including cash and unencumbered Agency assets totaled $4.5 billion. Further, tangible net book value "at risk" leverage was 9.2X as of Jun 30, 2020, improving from 9.4X as of Mar 31, 2020. Also, with ample authorized balance remaining for issuance under its ATM program and significant repurchase agreements outstanding used to fund investment portfolio, the company seems to be less susceptible to undergo credit crisis in uncertain times.
Encouraging Capital Deployment: During the April-June period, it repurchased 12.2 million shares or $147 million of its common stock under its $1-billion share-repurchase program. As of Jun 30, it had $750 million of common stock remaining available for buyback. The company plans to buy back shares only when the repurchase price is lower than the then-current estimate of tangible net book value per common share. The buyback program will enable it to respond to the volatility in AGNC Investment’s stock, enjoy immediate book value accretion and boost shareholders’ wealth.
Estimate Revision Trend and Positive Growth Estimates: The company is witnessing positive estimate revisions for 2020 and 2021. Over the past 30 days, the Zacks Consensus Estimate for 2020 and 2021 earnings has been revised upward by 5.7% and 3.4% to $2.22 and 2.11, respectively.
The company’s 2020 earnings are estimated to be up 2.8% as compared to the prior year. Moreover, 2020 NII is pinned at $1.4 billion, indicating a 110.3% year-over-year increase.
Other Stocks to Consider
Annaly Capital Management, Inc.’s (NLY - Free Report) Zacks Consensus Estimate for 2020 earnings has been revised 13.6% upward to $1 over the past month. The company currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Chimera Investment Corporation’s (CIM - Free Report) earnings estimates for the ongoing year have been revised 10.6% upward to $1.56 over the past month. The company currently carries a Zacks Rank of 2.
Capstead Mortgage Corporation’s earnings estimates for 2020 have been revised 11.5% upward to 68 cents over the past month. It currently carries a Zacks Rank of 2.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Here's Why AGNC Investment Deserves a Place in Your Portfolio
AGNC Investment Corp. (AGNC - Free Report) is a promising stock right now, backed by its investment portfolio-repositioning efforts and strong financial position, which place it well for growth. Further, earnings growth prospects and industry tailwinds make it an attractive pick.
The company reported second-quarter 2020 net spread and dollar-roll income (excluding estimated catch-up premium amortization cost) of 58 cents per share, beating the Zacks Consensus Estimate of 46 cents. Net interest income (NII) of $295 million grew from the prior-year quarter’s $123 million.Also, as of Jun 30, 2020, its tangible net book value per share was $14.92, up 9.5% from $13.62 as of Mar 31, 2020.
It has a trailing four-quarter earnings surprise of 14.6%, on average.
Shares of this Zacks Rank #2 (Buy) company have lost 4.9% over the past year compared with the industry’s decline of 29.8%.
Notably, AGNC Investment has a number of other aspects that make it a solid investment choice.
Prudent Asset-Selection Efforts: The company adheres to an active portfolio-management policy to adjust its portfolio and hedges amid a varying interest rate and mortgage market environment. Over the past few quarters, it has shifted focus from generic higher-coupon mortgage-backed securities (MBS) to lower coupon ones. Moreover, it continued its higher-coupon specified-pool MBS strategy that in the current scenario offers greater stability of cash flows and favorable prepayment characteristics. Such prudent steps taken in the early market-recovery phase positioned the company’s investment portfolio well to capitalize on the opportunities and deliver compelling returns.
Decent Financial Position: AGNC Investment’s liquidity as of Jun 30, 2020, including cash and unencumbered Agency assets totaled $4.5 billion. Further, tangible net book value "at risk" leverage was 9.2X as of Jun 30, 2020, improving from 9.4X as of Mar 31, 2020. Also, with ample authorized balance remaining for issuance under its ATM program and significant repurchase agreements outstanding used to fund investment portfolio, the company seems to be less susceptible to undergo credit crisis in uncertain times.
Encouraging Capital Deployment: During the April-June period, it repurchased 12.2 million shares or $147 million of its common stock under its $1-billion share-repurchase program. As of Jun 30, it had $750 million of common stock remaining available for buyback. The company plans to buy back shares only when the repurchase price is lower than the then-current estimate of tangible net book value per common share. The buyback program will enable it to respond to the volatility in AGNC Investment’s stock, enjoy immediate book value accretion and boost shareholders’ wealth.
Estimate Revision Trend and Positive Growth Estimates: The company is witnessing positive estimate revisions for 2020 and 2021. Over the past 30 days, the Zacks Consensus Estimate for 2020 and 2021 earnings has been revised upward by 5.7% and 3.4% to $2.22 and 2.11, respectively.
The company’s 2020 earnings are estimated to be up 2.8% as compared to the prior year. Moreover, 2020 NII is pinned at $1.4 billion, indicating a 110.3% year-over-year increase.
Other Stocks to Consider
Annaly Capital Management, Inc.’s (NLY - Free Report) Zacks Consensus Estimate for 2020 earnings has been revised 13.6% upward to $1 over the past month. The company currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Chimera Investment Corporation’s (CIM - Free Report) earnings estimates for the ongoing year have been revised 10.6% upward to $1.56 over the past month. The company currently carries a Zacks Rank of 2.
Capstead Mortgage Corporation’s earnings estimates for 2020 have been revised 11.5% upward to 68 cents over the past month. It currently carries a Zacks Rank of 2.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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