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Annaly (NLY) Up 2.1% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Annaly Capital Management (NLY - Free Report) . Shares have added about 2.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Annaly 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.

Annaly Meets Q3 Earnings Estimates, Witnesses Lower NII

Annaly reported third-quarter 2018 core earnings, excluding PAA, of 30 cents per share, meeting the Zacks Consensus Estimate. Further, the figure remained flat year over year.

During the quarter, the company increased its credit capital allocation from 24% in the year beginning to 30% in third-quarter 2018. However, results, to a great extent, were impacted by higher interest expenses, and general and administrative expenses.

Also, NII totaling $315.6 million, witnessed a sequential decline of around 5.5% in the third quarter.

Quarter in Detail

In the reported quarter, average yield on interest-earning assets (excluding PAA) was 3.21%, up from 3.04% recorded in the previous quarter.

Net interest spread (excluding PAA) of 1.14% for the third quarter edged down from 1.18% reported in the prior quarter. Net interest margin (excluding PAA) in the quarter came in at 1.50% compared with 1.56% witnessed in the previous quarter.

The company’s investment at fair value of Agency mortgage-backed securities was around $89.3 million as of Sep 30, 2018, up from approximately $86.6 million as of Jun 30, 2018.

Further, Annaly’s book value per share came in at $10.03 as of Sep 30, 2018, compared with $10.35 as of Jun 30, 2018. At the end of the third quarter, the company’s capital ratio was 12.6%, down from 13.2% reported at the end of the last quarter.

Leverage was 5:9:1 as of Sep 30, 2018, compared with 6:0:1 as of Jun 30, 2018. The company offered an annualized core return on average equity of 10.85% in the Sep-end quarter, down from 11.05% in the prior quarter.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

At this time, Annaly has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

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


Annaly has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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