Back to top

Image: Bigstock

Why Should You Bet on AGNC Investment (AGNC) Stock Right Now?

Read MoreHide Full Article

Shares of AGNC Investment Corp. (AGNC - Free Report) have been performing well, of late. In the past three months, the stock has rallied 17.6%, outperforming the industry’s growth of 8.5%.


This rally is anticipated to continue in the near term supported by a number of favorable factors.

The company adheres to an active portfolio-management policy that consists of re-evaluation and adjustment of its portfolio as well as hedges amid varying interest rate and mortgage-market environment. This cushions its portfolio from the negative impact of the prevalent accelerated prepayments.

Further, the company reported third-quarter 2019 net spread and dollar-roll income (excluding estimated catch-up premium amortization benefit) of 59 cents per share, beating the Zacks Consensus Estimate of 48 cents.Its investment portfolio aggregated $102.6 billion at the third-quarter end. This included $99 billion of agency mortgage backed securities (MBS), $1.9 billion of to-be-announced (TBA) securities, and $1.7 billion of credit risk transfer and non-agency securities.

If you haven’t taken advantage of the share-price appreciation yet, the time is right for you to bet on the stock, as it is poised to ride on its growth trajectory.

Key Driving Factors

Strategic portfolio-repositioning efforts: Over the recent quarters, AGNC Investment has made pronounced efforts to increase holdings of prepay-protected pools, and low-coupon TBA and MBS securities, while reducing exposure to generic cohorts that have higher prepayment exposure. This has enabled the company to manage risks related to interest rates and speedy pre-payments.

Sound financial health: The company’s debt/equity ratio stands at 0.03 compared with the industry average of 1.42. This reflects that it has a lower debt burden relative to its peers and will likely be able to fare well amid dynamic business environment.

Positive earnings revision: The trend in estimate revision for AGNC Investment’s 2019 earnings per share indicates an upbeat outlook for the company. In fact, it has witnessed 5.5% upward revision to $2.11 over the past month. 

Superior return on equity (ROE): AGNC Investment has a ROE of 11.9%, higher than the industry’s average of around 10%. This highlights optimal utilization of equity and boosts investors’ confidence in the stock.

Strong cash flow per share: The company generates cash flow per share of $2.64 as compared with the industry’s average of $1.80. Further, its cash flow is expected to improve 7.1% year over year in 2019 (compared with the industry’s decline of 1.05%). This makes us optimistic about AGNC Investment’s operating performance in the upcoming period.

Zacks Rank

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Stocks to Consider

Dynex Capital, Inc. (DX - Free Report) currently carries a Zacks Rank of 2. The Zacks Consensus Estimate for the company’s earnings per share for the ongoing year has remained unchanged at $2.03 over the past month. 

Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI - Free Report) also holds a Zacks Rank of 2, at present. The company’s earnings per share estimate for 2019 has remained unrevised at $1.37 over the past 30 days. 

MFA Financial, Inc. (MFA - Free Report) has witnessed marginal upward revision in 2019 earnings per share to 77 cents, over the past month. It also currently carries a Zacks Rank of 2. 

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Published in