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AGNC Investment (AGNC) Q2 Earnings Top Estimates, NII Down

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AGNC Investment Corp. AGNC reported second-quarter 2018 net spread and dollar-roll income (excluding estimated catch-up premium amortization benefit) of 63 cents per share, surpassing the Zacks Consensus Estimate of 62 cents. Moreover, the figure came in higher than the prior-quarter tally of 60 cents per share.

Further, the company reported second-quarter comprehensive income per common share of 34 cents, way above the 53 cents of comprehensive loss recorded in the prior quarter.

Also, as of Jun 30, 2018, the company’s tangible net book value per share came in at $18.41, down from $19.63 as of Jun 30, 2017.

The economic return on tangible common equity for the company during the reported quarter was 1.7%. This included dividend per share of 54 cents and a decrease of 22 cents in tangible net book value per share.

Net interest income (NII) of $177 million declined from the prior-quarter figure of $225 million.

AGNC Investment Corp. Price, Consensus and EPS Surprise

AGNC Investment Corp. Price, Consensus and EPS Surprise | AGNC Investment Corp. Quote

Inside the Headlines

As of Jun 30, 2018, the company’s investment portfolio aggregated $77.1 billion. This included 76.1 billion of agency mortgage backed securities (MBS) and to-be-announced (TBA) securities, $1 billion of credit risk transfer (CRT) and non-agency securities and $46 million of common stock of MTGE Investment Corp.

Inclusive of its net TBA position and net payable/ (receivable) for unsettled securities, AGNC Investment’s tangible net book value "at risk" leverage ratio was 8.3x as of Jun 30, 2018, against 8.2x as of Mar 31, 2018.

For the Apr-Jun quarter, the company's investment portfolio bore a weighted average constant repayment rate (CPR) of 9.7%, down from 8.6% reported in the last-reported quarter.

Excluding net TBA position, AGNC Investment's average asset yield came in at nearly 2.99% for the reported quarter, up from 3.05% recorded in the previous quarter.

For the second quarter, combined average cost of funds inclusive of interest rate swap costs, came in at 1.67%, an increase from 1.68% witnessed in the prior quarter.

Annualized net interest spread, including TBA dollar-roll income (excluding estimated catch- up premium amortization benefit), for the quarter came in at 1.35%, up from 1.26% reported in the last quarter.

Also, as of Jun 30, 2018, AGNC Investment’s cash and cash equivalents totaled around $863 million, down from $972 million as of Mar 31, 2018.

Dividend Update

In the quarter under review, AGNC Investment announced monthly dividends of 18 cents per share for April, May and June. Notably, the company had announced a total of $8 billion in common stock dividends or $38.24 per common share, since its initial public offering in May 2008, through second-quarter 2018.

AGNC Investment currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We now look forward to the earnings releases of other REITs like Vornado Realty Trust VNO, Boston Properties BXP and Extra Space Storage EXR. While Vornado will report Q2 figures on Jul 30, the other two companies are scheduled to release their quarterly numbers on Jul 31.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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