It has been about a month since the last earnings report for AGNC Investment (AGNC Quick QuoteAGNC - Free Report) . Shares have added about 19.8% 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 the most recent earnings report in order to get a better handle on the important catalysts.

AGNC Investment Tops on Q3 Net Spread and Dollar Roll

AGNC Investment’s third-quarter 2023 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization costs) of 65 cents beat the Zacks Consensus Estimate of 57 cents. However, the bottom line declined from 84 cents in the prior-year quarter.

Adjusted net interest and dollar roll income (excluding estimated "catch-up" premium amortization costs) of $499 million moved down from $514 million in the quarter-ago period.

The company reported a third-quarter comprehensive loss per common share of $1.02 compared with the prior-year quarter’s loss of $2.01.

Inside the Headlines

NII was negative $53 million against $177 million in the year-ago quarter. The Zacks Consensus Estimate was pegged at $310.2 million.

AGNC Investment's average asset yield on its portfolio was 4.26 % in the third quarter, up from 3.09% in the prior-year quarter.

The combined weighted average cost of funds, inclusive of interest rate swap, was 1.17% compared with 0.34% in the year-ago quarter.

The average net interest spread (excluding estimated "catch-up" premium amortization costs) was 3.03%, up from the 2.97% reported in the year-earlier quarter.

As of Sep 30, 2023, AGNC’s average tangible net book value "at risk" leverage ratio was 7.5 compared with 8.1 in the prior-year quarter.

In the third quarter, the company's investment portfolio bore an average actual constant prepayment rate of 7.1%, down from 9.2% in the previous-year quarter.
As of Sep 30, 2023, tangible net book value per common share (BVPS) was $8.08, down from $9.08 as of Sep 30, 2022.

The economic return on tangible common equity was negative 10.1%. This included a dividend per share of 36 cents and a decrease of 1.31 cents in tangible net BVPS.

As of Sep 30, 2023, the company’s investment portfolio aggregated $59.3 billion. This included $55.9 billion of Agency mortgage-backed securities, $2.4 million of net to-be-announced mortgage position, and $1.1 billion of credit risk transfer and non-Agency securities.

As of Sep 30, 2023, AGNC Investment’s cash and cash equivalents totaled $493 million, down from $1.01 billion as of Dec 31, 2022.

Dividend Update

In the third quarter, AGNC Investment announced a dividend of 12 cents per share each for July, August and September. Notably, management declared $12.6 billion in common stock dividends or $46.84 per common share since its initial public offering in May 2008 through third-quarter 2023.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward 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 bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, AGNC Investment has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

AGNC Investment is part of the Zacks REIT and Equity Trust industry. Over the past month, Annaly Capital Management (NLY Quick QuoteNLY - Free Report) , a stock from the same industry, has gained 13.3%. The company reported its results for the quarter ended September 2023 more than a month ago.

Annaly reported revenues of $-45.33 million in the last reported quarter, representing a year-over-year change of -116.3%. EPS of $0.66 for the same period compares with $1.06 a year ago.

Annaly is expected to post earnings of $0.64 per share for the current quarter, representing a year-over-year change of -28.1%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.5%.

Annaly has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.