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mREITs' Q2 Earnings to Watch on Jul 27: AGNC and CMO
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Second-quarter 2016 earnings releases for real estate investment trusts (“REITs”) is now in full-swing. Important mortgage REITs (“mREITs”) – a variant category of the commonplace REITs – which are slated to report their Apr-Jun quarter results on Jul 27 are American Capital Agency Corp. (AGNC - Free Report) and Capstead Mortgage Corp. .
Unlike other categories of REITs, mREITs do not actually own commercial properties, office buildings, residential complexes, shopping malls or premium outlets. Instead, they either loan money to property owners, or simply purchase existing mortgages and/or mortgage-backed securities (“MBSs”). These companies borrow money at a very low rate of interest, and in turn use it to purchase MBSs.
So, a low interest rate environment serves as a boon for the mREIT industry. During the first half of the second quarter, the chances of a rate hike kept the mREIT industry on tenterhooks. However, following the dismal jobs report in early June, chances of a hike were diminished substantially. This somewhat allayed the concerns of this industry.
Now let’s take a look at what’s in store for these mREITs which are slated to report tomorrow.
For doing this, we rely on the Zacks methodology, combining a favorable Zacks Rank – Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) – and a positive Earnings ESP, to predict the chances of a beat this quarter.
Our proprietary methodology, Earnings ESP, shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Research shows that with this combination of rank and ESP, chances of a positive earnings surprise are as high as 70% for the stocks.
Bethesda, MD-based American Capital Agency focuses on leveraged investments in agency MBS which includes residential mortgage pass-through securities and collateralized mortgage obligations (“CMOs”). The company has an Earnings ESP of -9.80% and a Zacks Rank #3, lacking the requirements of an earnings beat.
Capstead Mortgage is a Dallas, TX-based mREIT which is engaged in managing a leveraged portfolio of residential mortgage pass-through securities consisting mainly of ARM securities. The company has an Earnings ESP of 0.00% and a Zacks Rank #3. Our model does not conclusively predict that the company will record a positive surprise.
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mREITs' Q2 Earnings to Watch on Jul 27: AGNC and CMO
Second-quarter 2016 earnings releases for real estate investment trusts (“REITs”) is now in full-swing. Important mortgage REITs (“mREITs”) – a variant category of the commonplace REITs – which are slated to report their Apr-Jun quarter results on Jul 27 are American Capital Agency Corp. (AGNC - Free Report) and Capstead Mortgage Corp. .
Unlike other categories of REITs, mREITs do not actually own commercial properties, office buildings, residential complexes, shopping malls or premium outlets. Instead, they either loan money to property owners, or simply purchase existing mortgages and/or mortgage-backed securities (“MBSs”). These companies borrow money at a very low rate of interest, and in turn use it to purchase MBSs.
So, a low interest rate environment serves as a boon for the mREIT industry. During the first half of the second quarter, the chances of a rate hike kept the mREIT industry on tenterhooks. However, following the dismal jobs report in early June, chances of a hike were diminished substantially. This somewhat allayed the concerns of this industry.
Now let’s take a look at what’s in store for these mREITs which are slated to report tomorrow.
For doing this, we rely on the Zacks methodology, combining a favorable Zacks Rank – Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) – and a positive Earnings ESP, to predict the chances of a beat this quarter.
Our proprietary methodology, Earnings ESP, shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Research shows that with this combination of rank and ESP, chances of a positive earnings surprise are as high as 70% for the stocks.
Bethesda, MD-based American Capital Agency focuses on leveraged investments in agency MBS which includes residential mortgage pass-through securities and collateralized mortgage obligations (“CMOs”). The company has an Earnings ESP of -9.80% and a Zacks Rank #3, lacking the requirements of an earnings beat.
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Capstead Mortgage is a Dallas, TX-based mREIT which is engaged in managing a leveraged portfolio of residential mortgage pass-through securities consisting mainly of ARM securities. The company has an Earnings ESP of 0.00% and a Zacks Rank #3. Our model does not conclusively predict that the company will record a positive surprise.
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