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AGNC Investment (AGNC) Q4 Earnings, Sales Top Estimates
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AGNC Investment Corp. (AGNC - Free Report) reported fourth-quarter 2016 net spread and dollar roll income of 64 cents per share (excluding estimated "catch-up" premium amortization benefit) that comfortably beat the Zacks Consensus Estimate of 60 cents. The reported figure was same as the prior quarter.
Fourth quarter comprehensive loss per common share was $1.19 against income of $1.25 recorded in the prior quarter.
The economic return on equity for the company during the quarter was a negative 5.2%. This reflected dividend per share of 54 cents and a fall of $1.74 net book value per share.
The company’s annualized economic loss on common equity was 20.8% against economic income of 22.4% in the prior quarter. Moreover, as of Dec 31, 2016, the company’s net book value per share was $21.17, down from $22.91 as of Sep 30, 2016. This fall was attributed to underperformance of agency mortgage-backed securities (“MBSs”) relative to interest rate hedges and the rise in rate of interest in the quarter.
Notably, net interest income (“NII”) of $295 million beat the Zacks Consensus Estimate of $230 million. Also, it came in higher than the prior-quarter figure of $219 million.
Also, the company announced at the market equity offering program, which allows the company offer and sell, up to $750 million common shares.
AGNC plans to use the net proceeds derived from this offering for the acquisition of agency securities, non-agency securities, other mortgage-related assets and hedging instruments and for other general corporate purposes.
Inside the Headlines
As of Dec 31, 2016, the company’s investment portfolio aggregated $57.7 billion of agency MBS, to-be-announced (“TBA”) securities and credit risk transfer (“CRT”) securities and other non-agency securities. This included $11.2 billion of TBA mortgage position and $0.3 billion of CRT securities and other non-agency securities.
Inclusive of its net TBA position, AGNC Investment’s “at risk” leverage ratio was 7.7x as of Dec 31, 2016, unchanged sequentially. For the fourth quarter, the company’s investment portfolio bore a weighted-average constant repayment rate of 14.3%, unchanged sequentially.
Average asset yield on its "balance sheet funded assets" (investment portfolio excluding the net TBA position) was 3.43% for the fourth quarter, up from 2.60% in the prior quarter. Moreover, combined annualized net interest rate spread on the company’s balance sheet and dollar roll funded assets for the quarter was 2.02% compared with 1.42% in the prior quarter.
Also, as of Dec 31, 2016, AGNC Investment’s cash and cash equivalents totaled around $1.21 billion, down from $1.25 billion as on Sep 30, 2016.
Dividend Update
In the fourth quarter, AGNC Investment declared monthly dividends of 18 cents per share for October, November and December. Notably, the company disbursed a total of $6.8 billion in common dividends or $35.00 per common share, since its initial public offering in May 2008.
Conclusion
We expect AGNC Investment to remain range bound in the near term, given the current market volatility. The company’s concerted measures to reposition its portfolio for meeting the current rate environment are expected to help it sail through the difficult times.
AGNC Investment currently has a Zacks Rank #3 (Hold). Over the past one month, its fourth-quarter 2016 estimates declined 6.3%.
Over the past one month period, the fourth-quarter 2016 estimates for Annaly and Starwood Property Trust remained unchanged at 30 cents and 47 cents, respectively. The fourth-quarter 2016 estimates for CYS Investments declined 7.7% to 24 cents.
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AGNC Investment (AGNC) Q4 Earnings, Sales Top Estimates
AGNC Investment Corp. (AGNC - Free Report) reported fourth-quarter 2016 net spread and dollar roll income of 64 cents per share (excluding estimated "catch-up" premium amortization benefit) that comfortably beat the Zacks Consensus Estimate of 60 cents. The reported figure was same as the prior quarter.
Fourth quarter comprehensive loss per common share was $1.19 against income of $1.25 recorded in the prior quarter.
The economic return on equity for the company during the quarter was a negative 5.2%. This reflected dividend per share of 54 cents and a fall of $1.74 net book value per share.
The company’s annualized economic loss on common equity was 20.8% against economic income of 22.4% in the prior quarter. Moreover, as of Dec 31, 2016, the company’s net book value per share was $21.17, down from $22.91 as of Sep 30, 2016. This fall was attributed to underperformance of agency mortgage-backed securities (“MBSs”) relative to interest rate hedges and the rise in rate of interest in the quarter.
Notably, net interest income (“NII”) of $295 million beat the Zacks Consensus Estimate of $230 million. Also, it came in higher than the prior-quarter figure of $219 million.
Also, the company announced at the market equity offering program, which allows the company offer and sell, up to $750 million common shares.
AGNC plans to use the net proceeds derived from this offering for the acquisition of agency securities, non-agency securities, other mortgage-related assets and hedging instruments and for other general corporate purposes.
Inside the Headlines
As of Dec 31, 2016, the company’s investment portfolio aggregated $57.7 billion of agency MBS, to-be-announced (“TBA”) securities and credit risk transfer (“CRT”) securities and other non-agency securities. This included $11.2 billion of TBA mortgage position and $0.3 billion of CRT securities and other non-agency securities.
Inclusive of its net TBA position, AGNC Investment’s “at risk” leverage ratio was 7.7x as of Dec 31, 2016, unchanged sequentially. For the fourth quarter, the company’s investment portfolio bore a weighted-average constant repayment rate of 14.3%, unchanged sequentially.
Average asset yield on its "balance sheet funded assets" (investment portfolio excluding the net TBA position) was 3.43% for the fourth quarter, up from 2.60% in the prior quarter. Moreover, combined annualized net interest rate spread on the company’s balance sheet and dollar roll funded assets for the quarter was 2.02% compared with 1.42% in the prior quarter.
Also, as of Dec 31, 2016, AGNC Investment’s cash and cash equivalents totaled around $1.21 billion, down from $1.25 billion as on Sep 30, 2016.
Dividend Update
In the fourth quarter, AGNC Investment declared monthly dividends of 18 cents per share for October, November and December. Notably, the company disbursed a total of $6.8 billion in common dividends or $35.00 per common share, since its initial public offering in May 2008.
Conclusion
We expect AGNC Investment to remain range bound in the near term, given the current market volatility. The company’s concerted measures to reposition its portfolio for meeting the current rate environment are expected to help it sail through the difficult times.
AGNC Investment currently has a Zacks Rank #3 (Hold). Over the past one month, its fourth-quarter 2016 estimates declined 6.3%.
Some top-ranked REITs include Annaly Capital Management, Inc. (NLY - Free Report) , CYS Investments, Inc. and Starwood Property Trust, Inc. (STWD - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Over the past one month period, the fourth-quarter 2016 estimates for Annaly and Starwood Property Trust remained unchanged at 30 cents and 47 cents, respectively. The fourth-quarter 2016 estimates for CYS Investments declined 7.7% to 24 cents.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>