Yahoo Finance Annaly (NLY) Earnings Meet Estimates in Q1, NII Declines
Annaly Capital Management, Inc. NLY reported first-quarter 2020 core earnings, excluding premium amortization adjustment (PAA), of 21 cents per share, meeting the Zacks Consensus Estimate. However, the figure compared unfavorably with the year-ago quarter’s 29 cents.
Net interest income (NII) was $51.6 million, marking a steep decline from the prior quarter’s $454.2 million as well as the year-ago period’s $218.5 million.
Moreover, in the first quarter, definitive agreements were signed, per which Annaly will acquire its external manager, Annaly Management Company LLC, and change to being an internally-managed REIT. The transaction is expected to close in second-quarter 2020.
Quarter in Detail
The company ended the quarter with a $99.3-billion investment portfolio. Of this, 93% account for investments in Agency mortgage-backed securities (MBS). Moreover, at first-quarter 2020 end, unencumbered assets stood at $6.9 billion.
In the reported quarter, average yield on interest-earning assets (excluding PAA) was 2.91%, down from the prior quarter’s 3.25%.
However, net interest spread (excluding PAA) of 1% for the first quarter declined from 1.24% reported in the prior quarter. Net interest margin (excluding PAA) in the quarter was 1.18% compared with 1.41% witnessed in fourth-quarter 2019.
Also, Annaly’s book value per share was $7.50 as of Mar 31, 2020, down from $9.66 as of the prior quarter end. Additionally, book value per share compared unfavorably with $9.97 as of Mar 31, 2019. At the end of the March-end quarter, the company’s capital ratio was 12.3%, up from 12% reported at the end of fourth-quarter 2019.
Economic leverage was 6.8:1 as of Mar 31, 2020, compared with 7.2:1 as of Dec 31, 2019. The company offered an annualized core return on average equity (excluding PAA) of 9.27% in the January-March period, down from the prior quarter’s 10.56%.
Conclusion
Amid the disruptions in the mortgage market due to the economic impact of the coronavirus pandemic, MBS valuations witnessed a steep decline. Nonetheless, the Federal Reserve’s asset purchase initiatives in a bid to support the MBS andthe broader financial market have provided support to the markets.
The underperformance of mortgage assets and significant losses in its hedging instruments have likely resulted in the book value per share decline for Annaly in first-quarter 2020.
Annaly Capital Management Inc Price, Consensus and EPS Surprise
Annaly Capital Management Inc price-consensus-eps-surprise-chart | Annaly Capital Management Inc Quote
Annaly currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other REIT Releases
Omega Healthcare Investors, Inc. OHI is slated to report first-quarter results on May 4.
Hannon Armstrong Sustainable Infrastructure Capital, Inc. HASI is scheduled to release earnings on May 7.
Americold Realty Trust COLD is expected to release earnings results on May 7.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Omega Healthcare Investors, Inc. (OHI) : Free Stock Analysis Report
Annaly Capital Management Inc (NLY) : Free Stock Analysis Report
Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI) : Free Stock Analysis Report
Americold Realty Trust (COLD) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
