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Why Is AGNC Investment (AGNC) Up 6.6% 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 6.6% 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 drivers.
AGNC Investment Q4 Earnings Miss Estimates, Asset Yield Improves Y/Y
AGNC Investment's fourth-quarter 2024 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization benefit) of 37 cents missed the Zacks Consensus Estimate of 42 cents. Also, the bottom line declined from 60 cents in the year-ago quarter.
Adjusted net interest and dollar roll income of $405 million moved down 18.5% from the year-ago quarter.
The company reported a fourth-quarter comprehensive loss per common share of 11 cents against a comprehensive income of 1 cent per share in the year-ago quarter.
In 2024, net spread and dollar roll income per common share of $1.88 per share missed the consensus estimate of $1.95. However, the metric fell from $2.61 in 2023. Adjusted net interest and dollar roll income was $1.8 billion, up 9% from 2023.
Inside AGNC's Headlines
Net interest income (NII) was $115 million against net interest expenses of $26 million in the prior-year quarter. The metric missed the Zacks Consensus Estimate by 23.7%.
For 2024, NII was $18 million, which missed the Zacks Consensus Estimate of $314 billion. The metric compared favorably with $246 million of net interest expenses in 2023.
AGNC Investment's average asset yield on its portfolio was 5.02% in the fourth quarter, up from 4.55% in the fourth quarter of 2023.
The combined weighted average cost of funds, inclusive of interest rate swap, was 2.89% compared with 1.39% in the fourth quarter of 2023.
The average net interest spread (excluding estimated "catch-up" premium amortization benefits) was 1.91%, down from 3.08% in the previous quarter.
As of Dec. 31, 2024, AGNC’s average tangible net book value "at risk" leverage ratio was 7.2X, down from 7.4X from the prior-year quarter.
In the fourth quarter, the company's investment portfolio bore an average actual constant prepayment rate of 9.6%, up from 6.2% in the year-ago quarter.
As of Dec. 31, 2024, tangible net book value per common share (BVPS) was $8.41, down 3.3% on a year-over-year basis.
The economic return on tangible common equity was negative 0.6% against 12.1% in the year-ago quarter. This included a dividend per share of 36 cents and a decrease of 41 cents in tangible net BVPS.
As of Dec. 31, 2024, the company’s investment portfolio aggregated $73.3 billion. This included $65.5 billion of Agency mortgage-backed securities and $6.9 billion of net forward purchases of Agency MBS in the to-be-announced market, as well as $0.9 billion of credit risk transfer, and non-Agency securities and other mortgage credit investments.
AGNC Investment’s Balance Sheet Position
As of Dec. 31, 2024, AGNC’s cash and cash equivalents totaled $505 million, down 0.4% from the prior quarter.
AGNC's Dividend Update
In the fourth quarter, AGNC Investment announced a dividend of 12 cents per share each for October, November and December, totaling $0.36 per share for the quarter. Management declared $14 billion in common stock dividends or $48.64 per share since its initial public offering in May 2008 through the fourth quarter of 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
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. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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. Notably, AGNC Investment has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is AGNC Investment (AGNC) Up 6.6% Since Last Earnings Report?
A month has gone by since the last earnings report for AGNC Investment (AGNC - Free Report) . Shares have added about 6.6% 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 drivers.
AGNC Investment Q4 Earnings Miss Estimates, Asset Yield Improves Y/Y
AGNC Investment's fourth-quarter 2024 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization benefit) of 37 cents missed the Zacks Consensus Estimate of 42 cents. Also, the bottom line declined from 60 cents in the year-ago quarter.
Adjusted net interest and dollar roll income of $405 million moved down 18.5% from the year-ago quarter.
The company reported a fourth-quarter comprehensive loss per common share of 11 cents against a comprehensive income of 1 cent per share in the year-ago quarter.
In 2024, net spread and dollar roll income per common share of $1.88 per share missed the consensus estimate of $1.95. However, the metric fell from $2.61 in 2023. Adjusted net interest and dollar roll income was $1.8 billion, up 9% from 2023.
Inside AGNC's Headlines
Net interest income (NII) was $115 million against net interest expenses of $26 million in the prior-year quarter. The metric missed the Zacks Consensus Estimate by 23.7%.
For 2024, NII was $18 million, which missed the Zacks Consensus Estimate of $314 billion. The metric compared favorably with $246 million of net interest expenses in 2023.
AGNC Investment's average asset yield on its portfolio was 5.02% in the fourth quarter, up from 4.55% in the fourth quarter of 2023.
The combined weighted average cost of funds, inclusive of interest rate swap, was 2.89% compared with 1.39% in the fourth quarter of 2023.
The average net interest spread (excluding estimated "catch-up" premium amortization benefits) was 1.91%, down from 3.08% in the previous quarter.
As of Dec. 31, 2024, AGNC’s average tangible net book value "at risk" leverage ratio was 7.2X, down from 7.4X from the prior-year quarter.
In the fourth quarter, the company's investment portfolio bore an average actual constant prepayment rate of 9.6%, up from 6.2% in the year-ago quarter.
As of Dec. 31, 2024, tangible net book value per common share (BVPS) was $8.41, down 3.3% on a year-over-year basis.
The economic return on tangible common equity was negative 0.6% against 12.1% in the year-ago quarter. This included a dividend per share of 36 cents and a decrease of 41 cents in tangible net BVPS.
As of Dec. 31, 2024, the company’s investment portfolio aggregated $73.3 billion. This included $65.5 billion of Agency mortgage-backed securities and $6.9 billion of net forward purchases of Agency MBS in the to-be-announced market, as well as $0.9 billion of credit risk transfer, and non-Agency securities and other mortgage credit investments.
AGNC Investment’s Balance Sheet Position
As of Dec. 31, 2024, AGNC’s cash and cash equivalents totaled $505 million, down 0.4% from the prior quarter.
AGNC's Dividend Update
In the fourth quarter, AGNC Investment announced a dividend of 12 cents per share each for October, November and December, totaling $0.36 per share for the quarter. Management declared $14 billion in common stock dividends or $48.64 per share since its initial public offering in May 2008 through the fourth quarter of 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
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. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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. Notably, AGNC Investment has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.