A month has gone by since the last earnings report for AGNC Investment (AGNC Quick QuoteAGNC - Free Report) . Shares have lost about 3.4% 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 catalysts.

AGNC Investment Q3 Earnings Miss Estimates, Asset Yield Improves

AGNC Investment's third-quarter 2024 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization benefit) of 43 cents missed the Zacks Consensus Estimate of 47 cents. Also, the bottom line declined from the 65 cents reported in the previous quarter.

Adjusted net interest and dollar roll income of $420 million moved down 12.9% from the previous quarter.

The company reported a third-quarter comprehensive income per common share of 64 cents against a comprehensive loss of 13 cents in the prior quarter.

Inside AGNC's Headlines

Net interest expenses were $64 million compared with $3 million in the prior quarter. The Zacks Consensus Estimate was pegged at $219.3 million.
AGNC Investment's average asset yield on its portfolio was 4.73% in the third quarter, up from 4.69% reported in the prior quarter.

The combined weighted average cost of funds, inclusive of interest rate swap, was 2.52% compared with 2% in the prior quarter.

The average net interest spread (excluding estimated "catch-up" premium amortization benefits) was 2.21%, down from 2.69% in the previous quarter.

As of Sept. 30, 2024, AGNC’s average tangible net book value "at risk" leverage ratio was 7.2X, which remained unchanged from the prior quarter.

In the third quarter, the company's investment portfolio bore an average actual constant prepayment rate of 7.3%, up from 7.1% in the previous quarter.

As of Sept. 30, 2024, tangible net book value per common share (BVPS) was $8.82, up 5% sequentially.

The economic return on tangible common equity was 9.3% against negative 0.9% in the previous quarter. This included a dividend per share of 36 cents and an increase of 42 cents in tangible net BVPS.

As of Sept. 30, 2024, the company’s investment portfolio aggregated $73.1 billion. This included $68 billion of Agency mortgage-backed securities, $4.1 million of net forward purchases of Agency MBS in the to-be-announced market, and $1 billion of credit risk transfer and non-Agency securities and other mortgage credit investments.

AGNC’s Balance Sheet Position

As of Sept. 30, 2024, AGNC Investment’s cash and cash equivalents totaled $507 million, down 4.3% from the prior quarter.

AGNC's Dividend Update

In the third quarter, AGNC Investment announced a dividend of 12 cents per share each for July, August and September. Management declared $13.7 billion in common stock dividends or $48.28 per share since its initial public offering in May 2008 through the third quarter of 2024.

How Have Estimates Been Moving Since Then?

It turns out, estimates review 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 fifth 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 indicates a downward shift. It's no surprise AGNC Investment has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.