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Annaly Capital's (NLY) Q1 Earnings Beat Estimates, Up Y/Y

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Annaly Capital Management, Inc. (NLY - Free Report) – the mortgage real estate investment trust (mREIT) – reported first-quarter 2017 adjusted core earnings of 31 cents per share, beating the Zacks Consensus Estimate by a penny. The prior-year quarter figure was also 30 cents per share.

Net interest income (NII) in the quarter totaled $389.3 million, reflecting an increase of 61.7% year over year.

Quarter in Detail

In the reported quarter, average yield on interest-earning assets was 2.74%, while average cost of interest-bearing liabilities (including interest expense on interest rate swaps) was 1.59%.

This led to a net interest rate spread of 1.15% for the quarter, reflecting a year-over-year increase of 79 basis points. Net interest margin came in at 1.47% compared with 0.79% in the year-ago period.

The company’s investment at fair value (including Agency mortgage-backed securities and Agency debentures) was $72.7 billion as of Mar 31, 2017, up from $65.6 billion as of Mar 31, 2016.

Annaly’s book value per share came in at $11.23 as of Mar 31, 2017, compared with $11.16 as of Dec 31, 2016. At the end of the first quarter, the company’s capital ratio (representing the ratio of stockholders’ equity to total assets) was 13.8%, up from 13.2% at the end of the prior-year quarter.

Leverage was 5.6:1 as of Mar 31, 2017, compared with 5.3:1 as of Mar 31, 2016. The company offered an annualized core return on average equity of 10.09% in the quarter, up from 4.19% in the year-ago quarter.

Our Take

Going forward, we believe Annaly’s diversification into commercial assets would help enhance its top-line growth.

Another mREIT – AGNC Investment Corp. (AGNC - Free Report) – reported first-quarter 2017 net spread and dollar roll income of 64 cents per share (excluding estimated "catch-up" premium amortization benefit), comfortably beating the Zacks Consensus Estimate of 58 cents. The prior-quarter figure was also 64 cents per share.

Annaly Capital Management Inc Price, Consensus and EPS Surprise

Annaly Capital Management Inc Price, Consensus and EPS Surprise | Annaly Capital Management Inc Quote

While Annaly has a Zacks Rank #4 (Sell), AGNC Investment carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Two other REITs which are slated to report results next week are Regency Centers Corporation (REG - Free Report) and Mack-Cali Realty Corporation .

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