Time New York: Wed 17 Oct 01:58 am  |  Save 15% on H&R Block Online

  
caticonslite_bm_alt

Annaly Capital (NLY) Q4 Earnings Beat Estimates, NII Grows

Zacks

Annaly Capital Management, Inc. NLY reported fourth-quarter 2017 adjusted core earnings of 31 cents per share, beating the Zacks Consensus Estimate by a penny. Also, earnings compared favorably with the prior-quarter figure of 30 cents.

Results highlight an increase in net interest income (NII) in the fourth quarter, which totaled $426.7 million, representing sequential growth of 20.7%.

Quarter in Detail

In the reported quarter, average yield on interest-earning assets, excluding premium amortization adjustment (PAA) was 3.02%, up from 2.97% reported in the previous quarter.

Net interest rate spread (excluding PAA) of 1.19% for the fourth quarter inched up from 1.15% reported in the prior quarter. Net interest margin (excluding PAA) came in at 1.51% compared with 1.47% recorded in the prior quarter.

The company’s investment at fair value of Agency mortgage-backed securities was $90.6 billion as of Dec 31, 2017, up from $85.9 billion as of Sep 30, 2017.

Annaly’s book value per share came in at $11.34 as of Dec 31, 2017, compared with $11.42 as of Sep 30, 2017. At the end of the fourth quarter, the company’s capital ratio was 12.9%, up from 12.3% at the end of the previous quarter.

Leverage was 5:7:1 as of Dec 31, 2017, compared with 5:4:1 as of Sep 30, 2017. The company offered an annualized core return on average equity of 10.67% in the reported quarter, up from 10.57% in the prior quarter.

Our Take

We are impressed by Annaly’s better-than-expected results. The company’s prudent selection of assets, diversified investment and financing options, as well as exposure to high-quality mortgage-backed securities (MBSs) are anticipated to support bottom-line growth.

Over the past six months, the company raised $2.8 billion in the common and preferred equity markets, and made efforts to diversify its portfolio. The company also lowered its leverage to boost liquidity and enhanced hedging activity. However, the company faces stiff competition from other financial institutions. Further, adverse macro-economic conditions and any rise in rate of interest might add to its woes.

Currently, Annaly carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, the stock has depreciated 15.9% in the past six months, underperforming the 12.7% loss incurred by the industry it belongs to.

Annaly Capital Management Inc Price, Consensus and EPS Surprise

Annaly Capital Management Inc Price, Consensus and EPS Surprise | Annaly Capital Management Inc Quote

We are now looking forward to the earnings releases of Public Storage PSA, Host Hotels & Resorts, Inc. HST and Welltower Inc. HCN all of which are expected to report quarterly figures in the next week.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>



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

To read this article on Zacks.com click here.

Zacks Investment Research
<-- You can share this post with your network,
or give us your opinion and leave a comment.
Be sure to check our RSS feeds for updates.

Automatically Feed Your Blog