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Why Is AGNC Investment (AGNC) Up 4.4% Since Last Earnings Report?
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A month has gone by since the last earnings report for AGNC Investment (AGNC - Free Report) . Shares have added about 4.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is AGNC Investment due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
AGNC Investment Q2 Earnings Beat Estimates, NII Rises
AGNC Investment reported second-quarter 2020 net spread and dollar-roll income (excluding estimated catch-up premium amortization cost) of 58 cents per share, beating the Zacks Consensus Estimate of 46 cents. Moreover, the reported figure was higher than the prior-quarter figure of 49 cents per share.
Adjusted net interest and dollar roll income (excluding catch-up premium amortization) was $372 million, surpassing the Zacks Consensus Estimate of $339 million. The reported figure also improved from the year-ago number of $295 million.
NII of $295 million grew from the prior-year quarter’s $123 million.
The company reported second-quarter comprehensive income per common share of $1.60 as against comprehensive loss per common share of 15 cents reported in the prior-year quarter.
Also, as of Jun 30, 2020, its tangible net book value per share was $14.92, up 9.5% from $13.62 as of Mar 31, 2020. However, it compares unfavorably with the tangible net book value per share of $16.58 as of Jun 30, 2019.
The economic loss on tangible common equity for the company during the reported quarter was 12.2%. This included a dividend per share of 36 cents and an increase of $1.30 in tangible net book value per share.
Inside the Headlines
As of Jun 30, 2020, the company’s investment portfolio aggregated $97.7 billion. This included $75.8 billion of Agency MBS, $20.5 billion of to-be-announced (TBA) securities, and $1.3 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 9.2X as of Jun 30, 2020, as compared to 9.4X in the prior quarter.
For the March-end quarter, the company's investment portfolio bore a weighted average CPR of 19.9%, up from 12.2% witnessed in first-quarter 2020.
Excluding net TBA position, AGNC Investment's average asset yield on its portfolio, excluding the net TBA position, was 2.39% in the second quarter, up from 2.01% recorded in the previous quarter.
For the June-end quarter, combined average cost of funds inclusive of interest rate swap costs came in at 0.88%, down from 1.67% witnessed in the previous quarter.
Average net interest spread (excluding catch- up premium amortization), came in at 1.68%, up from the 1.30% reported in the prior quarter.
Also, as of Jun 30, 2020, AGNC Investment’s cash and cash equivalents totaled $859 million, up from $831 million as of Dec 31, 2019.
Dividend Update and Share Repurchase
During the second quarter, AGNC Investment announced a monthly dividend of 12 cents per share each for April, May and June. Notably, the company announced $10.1 billion in common stock dividends or $42.16 per common share since its initial public offering in May 2008 through second-quarter 2020.
AGNC Investment's board of directors authorized the company to repurchase up to $1 billion of its shares of common stock through Dec 31, 2020. During the April-June period, the company repurchased 12.2 million shares or $147 million of its common stock for an average price of $11.99 per share. As of Jun 30, it had $750 million of common stock remaining available for buyback.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 17.15% due to these changes.
VGM Scores
Currently, AGNC Investment has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise AGNC Investment has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is AGNC Investment (AGNC) Up 4.4% Since Last Earnings Report?
A month has gone by since the last earnings report for AGNC Investment (AGNC - Free Report) . Shares have added about 4.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is AGNC Investment due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
AGNC Investment Q2 Earnings Beat Estimates, NII Rises
AGNC Investment reported second-quarter 2020 net spread and dollar-roll income (excluding estimated catch-up premium amortization cost) of 58 cents per share, beating the Zacks Consensus Estimate of 46 cents. Moreover, the reported figure was higher than the prior-quarter figure of 49 cents per share.
Adjusted net interest and dollar roll income (excluding catch-up premium amortization) was $372 million, surpassing the Zacks Consensus Estimate of $339 million. The reported figure also improved from the year-ago number of $295 million.
NII of $295 million grew from the prior-year quarter’s $123 million.
The company reported second-quarter comprehensive income per common share of $1.60 as against comprehensive loss per common share of 15 cents reported in the prior-year quarter.
Also, as of Jun 30, 2020, its tangible net book value per share was $14.92, up 9.5% from $13.62 as of Mar 31, 2020. However, it compares unfavorably with the tangible net book value per share of $16.58 as of Jun 30, 2019.
The economic loss on tangible common equity for the company during the reported quarter was 12.2%. This included a dividend per share of 36 cents and an increase of $1.30 in tangible net book value per share.
Inside the Headlines
As of Jun 30, 2020, the company’s investment portfolio aggregated $97.7 billion. This included $75.8 billion of Agency MBS, $20.5 billion of to-be-announced (TBA) securities, and $1.3 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 9.2X as of Jun 30, 2020, as compared to 9.4X in the prior quarter.
For the March-end quarter, the company's investment portfolio bore a weighted average CPR of 19.9%, up from 12.2% witnessed in first-quarter 2020.
Excluding net TBA position, AGNC Investment's average asset yield on its portfolio, excluding the net TBA position, was 2.39% in the second quarter, up from 2.01% recorded in the previous quarter.
For the June-end quarter, combined average cost of funds inclusive of interest rate swap costs came in at 0.88%, down from 1.67% witnessed in the previous quarter.
Average net interest spread (excluding catch- up premium amortization), came in at 1.68%, up from the 1.30% reported in the prior quarter.
Also, as of Jun 30, 2020, AGNC Investment’s cash and cash equivalents totaled $859 million, up from $831 million as of Dec 31, 2019.
Dividend Update and Share Repurchase
During the second quarter, AGNC Investment announced a monthly dividend of 12 cents per share each for April, May and June. Notably, the company announced $10.1 billion in common stock dividends or $42.16 per common share since its initial public offering in May 2008 through second-quarter 2020.
AGNC Investment's board of directors authorized the company to repurchase up to $1 billion of its shares of common stock through Dec 31, 2020. During the April-June period, the company repurchased 12.2 million shares or $147 million of its common stock for an average price of $11.99 per share. As of Jun 30, it had $750 million of common stock remaining available for buyback.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 17.15% due to these changes.
VGM Scores
Currently, AGNC Investment has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise AGNC Investment has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.