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Volatile mortgage rates and steady spreads may pressure book value despite gains in servicing income.
Annaly Capital Management Inc. (NLY - Free Report) is scheduled to report second-quarter 2025 results on July 23, after market close. The company’s results are expected to reflect year-over-year increases in earnings and net interest income (NII) in the quarter to be reported.
In the last reported quarter, the mortgage real estate investment trust (mREIT) posted earnings available for distribution per share of 72 cents, beating the Zacks Consensus Estimate. Improvements in the average yield on interest-earning assets supported results. However, the company registered a year-over-year decline in book value per share (BVPS).
Annaly has an impressive earnings surprise history. Its earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 2.60%.
Annaly Capital Management Inc Price and EPS Surprise
Let us see how things have shaped up prior to the second-quarter earnings announcement.
Despite interest rate cuts by the Federal Reserve in 2024, mortgage rates did not come down meaningfully. In the second quarter, mortgage rates fluctuated, but they remained in the mid-to-upper 6% range. As such, refinancing activities and origination volumes witnessed decent growth.
Amid this, a significant portion of NLY’s MBS holdings is anticipated to have witnessed elevated levels of constant prepayment rate. This is expected to have positively impacted net premium amortization in the second quarter, thereby supporting growth in interest income and average asset yield.
The consensus estimate for second-quarter NII is pegged at $410.5 million, suggesting a rise from the year-ago quarter’s reported NII of $53.6 million.
The primary-secondary spread has averaged 1.06% in the second quarter of 2025, below the first quarter’s average of 1.12%. Due to increased volatility in the market, the primary-secondary spread may be slightly skewed. As such, NLY’s gain on sale margins in the second quarter of 2025 are likely to have been relatively steady.
With primary-secondary spreads relatively stable and increased mortgage rate volatility, Annaly is likely to have seen a decline in its book value per share in the quarter to be reported.
Given the relatively lower prepayment speed, the company’s mortgage servicing rights portfolio is likely to have been impacted positively to some extent. This is anticipated to have increased NLY's servicing fees in the quarter to be reported.
The Zacks Consensus Estimate for net servicing income of $121 million indicates a year-over-year rise of 13%.
What the Zacks Model Reveals for Annaly
Our proven model does not show that an earnings beat is likely for NLY this time around. This is because the company does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: Annaly has an Earnings ESP of 0.00%.
The Zacks Consensus Estimate for earnings has been unchanged at 71 cents. The metric indicates a year-over-year rise of 4.4%.
NLY Peers Worth a Look
A couple of Annaly peers that have the right combination of elements to post an earnings beat in the upcoming releases per our model are Angel Oak Mortgage REIT Inc. (AOMR - Free Report) and ARMOUR Residential REIT, Inc. (ARR - Free Report) .
The Earnings ESP for AOMR is +3.70% and it currently carries a Zacks Rank #3. The company is expected to report second-quarter 2025 results on August 5. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
ARR is expected to release second-quarter 2025 earnings on July 23. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +1.86%.
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Annaly is Set to Report Q2 Earnings: What's in Store for the Stock?
Key Takeaways
Annaly Capital Management Inc. (NLY - Free Report) is scheduled to report second-quarter 2025 results on July 23, after market close. The company’s results are expected to reflect year-over-year increases in earnings and net interest income (NII) in the quarter to be reported.
In the last reported quarter, the mortgage real estate investment trust (mREIT) posted earnings available for distribution per share of 72 cents, beating the Zacks Consensus Estimate. Improvements in the average yield on interest-earning assets supported results. However, the company registered a year-over-year decline in book value per share (BVPS).
Annaly has an impressive earnings surprise history. Its earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 2.60%.
Annaly Capital Management Inc Price and EPS Surprise
Annaly Capital Management Inc price-eps-surprise | Annaly Capital Management Inc Quote
Let us see how things have shaped up prior to the second-quarter earnings announcement.
Despite interest rate cuts by the Federal Reserve in 2024, mortgage rates did not come down meaningfully. In the second quarter, mortgage rates fluctuated, but they remained in the mid-to-upper 6% range. As such, refinancing activities and origination volumes witnessed decent growth.
Amid this, a significant portion of NLY’s MBS holdings is anticipated to have witnessed elevated levels of constant prepayment rate. This is expected to have positively impacted net premium amortization in the second quarter, thereby supporting growth in interest income and average asset yield.
The consensus estimate for second-quarter NII is pegged at $410.5 million, suggesting a rise from the year-ago quarter’s reported NII of $53.6 million.
The primary-secondary spread has averaged 1.06% in the second quarter of 2025, below the first quarter’s average of 1.12%. Due to increased volatility in the market, the primary-secondary spread may be slightly skewed. As such, NLY’s gain on sale margins in the second quarter of 2025 are likely to have been relatively steady.
With primary-secondary spreads relatively stable and increased mortgage rate volatility, Annaly is likely to have seen a decline in its book value per share in the quarter to be reported.
Given the relatively lower prepayment speed, the company’s mortgage servicing rights portfolio is likely to have been impacted positively to some extent. This is anticipated to have increased NLY's servicing fees in the quarter to be reported.
The Zacks Consensus Estimate for net servicing income of $121 million indicates a year-over-year rise of 13%.
What the Zacks Model Reveals for Annaly
Our proven model does not show that an earnings beat is likely for NLY this time around. This is because the company does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: Annaly has an Earnings ESP of 0.00%.
Zacks Rank: Annaly currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for earnings has been unchanged at 71 cents. The metric indicates a year-over-year rise of 4.4%.
NLY Peers Worth a Look
A couple of Annaly peers that have the right combination of elements to post an earnings beat in the upcoming releases per our model are Angel Oak Mortgage REIT Inc. (AOMR - Free Report) and ARMOUR Residential REIT, Inc. (ARR - Free Report) .
The Earnings ESP for AOMR is +3.70% and it currently carries a Zacks Rank #3. The company is expected to report second-quarter 2025 results on August 5. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
ARR is expected to release second-quarter 2025 earnings on July 23. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +1.86%.