We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Annaly (NLY) Q4 Earnings Meet Estimates, Book Value Up Q/Q
Read MoreHide Full Article
Annaly Capital Management, Inc. (NLY - Free Report) reported fourth-quarter 2020 core earnings, excluding premium amortization adjustment (PAA), of 30 cents per share that met the Zacks Consensus Estimate. Moreover, the figure compared favorably with the year-ago quarter’s 26 cents.
Net interest income (NII) was $432.7 million, surpassing the Zacks Consensus Estimate of $420.9 million. However, it compared unfavorably with the year-ago quarter’s $454.2 million.
While the decline in cost of interest-bearing liabilities supported Annaly, continued fall in average yield on interest-earning assets was spoilsport. Nonetheless, the company also registered sequential improvement in book value per share (BVPS).
For 2020, Annaly reported core earnings, excluding PAA per share of $1.10, up 10% from the prior year’s $1 and also outpaced the Zacks Consensus Estimate of $1.09. NII of $1.33 billion jumped 32.7% year over year and also outpaced the Zacks Consensus Estimate of $1.32 billion.
Inside the Headlines
As of the fourth-quarter end, the company had $101.6 billion of total assets, which included $94.6 billion in a highly-liquid Agency portfolio. Moreover, at the fourth-quarter 2020 end, unencumbered assets stood at $8.7 billion.
Markedly, Annaly modestly increased capital allocation to credit businesses to 22% from 20% in the fourth quarter.
In the reported quarter, average yield on interest-earning assets (excluding PAA) was 2.80%, down from the prior quarter’s 2.86%.
Moreover, net interest spread (excluding PAA) of 1.93% for the fourth quarter was stable from the prior quarter. Net interest margin (excluding PAA) in the quarter was 1.98 % compared with 2.05% witnessed in third-quarter 2020.
Also, Annaly’s book value per share was $8.92 as of Dec 31, 2020, sequentially up 2.5%. However, BVPS compared unfavorably with $9.66 as of Dec 31, 2019. At the end of the December quarter, the company’s capital ratio was 13.6%, unchanged from third-quarter 2020.
For the December-end quarter, weighted average actual constant prepayment rate (CPR) was 24.7%, up from 22.9% witnessed in third-quarter 2020.
Economic leverage was 6.2:1 as of Dec 31, 2020, stable from Sep 30, 2020. The company offered an annualized core return on average equity (excluding PAA) of 13.03% in the October-December period, down from the prior quarter’s 13.79%.
Share repurchased of common stock for 2020 amounted to $209 million.
Conclusion
Low interest rates and stability in the repo market have reduced Annaly’s funding costs. This along with the company’s low leverage levels and ample liquidity positions the company to capitalize on the improving outlook for residential mortgage finance. Further, it completed four residential whole loan securitizations totaling $1.8 billion in 2020.
However, amid the current low-rate environment, faster prepayment speed is concerning for the company, exposing it to reinvestment risks.
We now look forward to the earnings releases of other REITs like SBA Communications Corporation (SBAC - Free Report) , PS Business Parks, Inc. and Extra Space Storage (EXR - Free Report) , which are slated to report fourth-quarter results on Feb 22.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Image: Bigstock
Annaly (NLY) Q4 Earnings Meet Estimates, Book Value Up Q/Q
Annaly Capital Management, Inc. (NLY - Free Report) reported fourth-quarter 2020 core earnings, excluding premium amortization adjustment (PAA), of 30 cents per share that met the Zacks Consensus Estimate. Moreover, the figure compared favorably with the year-ago quarter’s 26 cents.
Net interest income (NII) was $432.7 million, surpassing the Zacks Consensus Estimate of $420.9 million. However, it compared unfavorably with the year-ago quarter’s $454.2 million.
While the decline in cost of interest-bearing liabilities supported Annaly, continued fall in average yield on interest-earning assets was spoilsport. Nonetheless, the company also registered sequential improvement in book value per share (BVPS).
For 2020, Annaly reported core earnings, excluding PAA per share of $1.10, up 10% from the prior year’s $1 and also outpaced the Zacks Consensus Estimate of $1.09. NII of $1.33 billion jumped 32.7% year over year and also outpaced the Zacks Consensus Estimate of $1.32 billion.
Inside the Headlines
As of the fourth-quarter end, the company had $101.6 billion of total assets, which included $94.6 billion in a highly-liquid Agency portfolio. Moreover, at the fourth-quarter 2020 end, unencumbered assets stood at $8.7 billion.
Markedly, Annaly modestly increased capital allocation to credit businesses to 22% from 20% in the fourth quarter.
In the reported quarter, average yield on interest-earning assets (excluding PAA) was 2.80%, down from the prior quarter’s 2.86%.
Moreover, net interest spread (excluding PAA) of 1.93% for the fourth quarter was stable from the prior quarter. Net interest margin (excluding PAA) in the quarter was 1.98 % compared with 2.05% witnessed in third-quarter 2020.
Also, Annaly’s book value per share was $8.92 as of Dec 31, 2020, sequentially up 2.5%. However, BVPS compared unfavorably with $9.66 as of Dec 31, 2019. At the end of the December quarter, the company’s capital ratio was 13.6%, unchanged from third-quarter 2020.
For the December-end quarter, weighted average actual constant prepayment rate (CPR) was 24.7%, up from 22.9% witnessed in third-quarter 2020.
Economic leverage was 6.2:1 as of Dec 31, 2020, stable from Sep 30, 2020. The company offered an annualized core return on average equity (excluding PAA) of 13.03% in the October-December period, down from the prior quarter’s 13.79%.
Share repurchased of common stock for 2020 amounted to $209 million.
Conclusion
Low interest rates and stability in the repo market have reduced Annaly’s funding costs. This along with the company’s low leverage levels and ample liquidity positions the company to capitalize on the improving outlook for residential mortgage finance. Further, it completed four residential whole loan securitizations totaling $1.8 billion in 2020.
However, amid the current low-rate environment, faster prepayment speed is concerning for the company, exposing it to reinvestment risks.
Annaly currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Annaly Capital Management Inc Price, Consensus and EPS Surprise
Annaly Capital Management Inc price-consensus-eps-surprise-chart | Annaly Capital Management Inc Quote
We now look forward to the earnings releases of other REITs like SBA Communications Corporation (SBAC - Free Report) , PS Business Parks, Inc. and Extra Space Storage (EXR - Free Report) , which are slated to report fourth-quarter results on Feb 22.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>