A month has gone by since the last earnings report for AGNC Investment (AGNC Quick QuoteAGNC - Free Report) . Shares have added about 20.1% in that time frame, outperforming 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 drivers.

AGNC Investment Tops on Q3 Net Spread and Dollar Roll

AGNC Investment reported a third-quarter 2022 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization costs) of 84 cents per share, beating the Zacks Consensus Estimate of 71 cents. The reported figure improved from 75 cents in third-quarter 2021.

Adjusted net interest and dollar roll income (excluding catch-up premium amortization) was $489 million, rising from the quarter-ago number of $443 million.

The company reported a third-quarter comprehensive loss per common share of $2.01 against the prior-year quarter’s income of 37 cents.

Inside the Headlines

NII of $177 million jumped 36.6% year over year but missed the Zacks Consensus Estimate of $289.1 million.

AGNC Investment's average asset yield on its portfolio was 3.09% in the third quarter, up from 2.30% in the prior-year quarter.

For the third quarter, the combined weighted average cost of funds, inclusive of the interest rate swap, was 0.50% against the total benefit of 0.03% in the prior-year quarter.

The average net interest spread (excluding catch-up premium amortization) was 2.81%, up from 2.19% reported in the prior-year quarter.

AGNC Investment’s tangible net book value "at risk" leverage ratio was 8.1X as of Sep 30, 2022, compared with 7.5X in the prior-year quarter.

For the third quarter, the company's investment portfolio bore a weighted average actual constant prepayment rate (CPR) of 9.2%, down from 22.5% in third-quarter 2021.

As of Sep 30, 2022, its tangible net book value per share (“BVPS”) was $9.08, down 20.5% from $11.43 as of Jun 30, 2022. Also, it compares unfavorably with BVPS of $16.41 as of Sep 30, 2021.

The annualized economic loss on tangible common equity for the company in the reported quarter was 17.4%. This included a dividend per share of 36 cents and a decrease of $2.35 in tangible net BVPS.

As of Sep 30, 2022, the company’s investment portfolio aggregated $61.5 billion. This included $41.9 billion of Agency mortgage-backed securities, $17.9 million of net to-be-announced mortgage position, and $1.7 billion of credit risk transfer and non-Agency securities.

As of Sep 30, 2022, AGNC Investment’s cash and cash equivalents totaled $976 million, up from $906 million as of Jun 30, 2022.

Dividend Update

In the third quarter, AGNC Investment announced a dividend of 12 cents per share each for July, August and September. Notably, the company declared $11.8 billion in common stock dividends or $45.40 per common share since its initial public offering in May 2008 through third-quarter 2022.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

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 this revision looks promising. It comes with little surprise AGNC Investment has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.