It has been about a month since the last earnings report for AGNC Investment (AGNC Quick QuoteAGNC - Free Report) . Shares have lost about 7.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is AGNC Investment due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

AGNC Investment Q2 Earnings Lag Estimates, NII Slips

AGNC Investment reported second-quarter 2019 net spread and dollar-roll income (excluding estimated catch-up premium amortization benefit) of 49 cents per share, marginally missing the Zacks Consensus Estimate of 50 cents. Moreover, it came in lower than the prior-year figure of 63 cents per share.

Nonetheless, the company reported second-quarter comprehensive loss per common share of 15 cents, as against the comprehensive income per common share of 34 cents posted in the prior-year quarter. NII of $123 million came in lower than the prior-year quarter figure of $177 million.

Also, as of Jun 30, 2019, the company’s tangible net book value per share came in at $16.58, down from $18.41 as of Jun 30, 2018.

The economic loss on tangible common equity for the company during the second quarter was 0.9%. This included dividend per share of 54 cents and a decrease of 65 cents in tangible net book value per share.

Inside the Headlines

As of Jun 30, 2019, the company’s investment portfolio aggregated $104.4 billion. This included $91.6 billion of agency MBS, $11.2 billion of TBA securities, and $1.7 billion of credit risk transfer and non-agency securities.

Inclusive of its net TBA position and net payable/ (receivable) for unsettled securities, AGNC Investment’s tangible net book value "at risk" leverage ratio was 9.8 as of Jun 30, 2019, compared with 9.4x as of Mar 31, 2019.

For the June-end quarter, the company's investment portfolio bore a weighted average constant prepayment rate of 10%, up from the 9.7% witnessed in second-quarter 2018.

Excluding net TBA position, AGNC Investment's average asset yield on its portfolio, excluding the net TBA position, came in at 2.99% in the second quarter, down from the 3.14% recorded in the previous quarter.

For the April-June quarter, combined average cost of funds inclusive of interest rate swap costs came in at 2.24%, a decline from 2.27% witnessed in the previous quarter.

Combined annualized net interest spread (excluding estimated catch- up premium amortization benefit), came in at 1%, down from 1.35% reported in prior-year quarter.

Also, as of Jun 30, 2019, AGNC Investment’s cash and cash equivalents totaled $870 million, down from $921 million as of Dec 31, 2018.

Dividend Update

During the second quarter, AGNC Investment announced monthly dividend of 18 cents, 16 cents and 16 cents per share for April, May and June, respectively. Notably, the company announced a total of $9.1 billion in common stock dividends or $40.36 per common share since its initial public offering in May 2008 through second-quarter 2019.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

At this time, AGNC Investment has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

AGNC Investment has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.