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Annaly (NLY) Stock Rises 3.5% on Q1 Earnings Beat, NII Falls

Annaly Capital Management, Inc. NLY reported first-quarter earnings available for distribution (EAD) per average share of 81 cents, which surpassed the Zacks Consensus Estimate of 72 cents. The figure declined from $1.11 in the year-ago quarter.

The company gained 3.5% following the release of its first-quarter 2023 results. A challenging operating backdrop amid significant volatility in interest rates and mortgage spreads are major near-term headwinds for NLY.

NLY registered a year-over-year decline in book value per share (BVPS) and margin, while the average yield on interest-earning assets improved.

Inside the Headlines

Net interest income (NII) was $19.47 million in the reported quarter, missing the Zacks Consensus Estimate of $183 million. The figure plunged year over year from $580.9 million.

At the first-quarter end, Annaly had $85.5 billion of total assets, with $77.6 billion invested in the Agency portfolio. At the end of the quarter, unencumbered assets were $5.7 billion.

In the reported quarter, the average yield on interest-earning assets (excluding premium amortization adjustment or PAA) was 3.96%, up from the prior-year quarter’s 2.62%. The average economic costs of interest-bearing liabilities were 2.34%, increasing from 0.89%.

Net interest spread (excluding PAA) of 1.62% in the first quarter fell from 1.73% in the prior-year quarter. Also, the net interest margin (excluding PAA) was 1.76% compared with 2.04% in first-quarter 2022.

Annaly’s BVPS was $20.77 as of Mar 31, 2023, down from $27.08 in the prior-year quarter. At the end of the reported quarter, Annaly’s economic capital ratio was 13.2%, up from 13.1% in the prior-year quarter.

In the first quarter, the weighted average actual constant prepayment rate was 5.5%, sequentially down from 7.5%.

Economic leverage was 6.4X as of Mar 31, 2023, up from 6.3X (sequentially) but flat from the prior-year quarter. Annaly generated an annualized EAD return on average equity (excluding PAA) of 14.82% in the first quarter, up from the prior-year quarter’s 14.01%.

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

Annaly Capital Management Inc Price, Consensus and EPS Surprise

 

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

Annaly Capital Management Inc price-consensus-eps-surprise-chart | Annaly Capital Management Inc Quote

 

Competitive Landscape

AGNC Investment Corp.’s AGNC first-quarter 2023 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization costs) of 70 cents per share beat the Zacks Consensus Estimate of 61 cents. The bottom line declined from 72 cents in the prior-year quarter.

AGNC Investment’s adjusted net interest and dollar roll income (excluding catch-up premium amortization) was $493 million, rising from the quarter-ago number of $423 million.

Starwood Property Trust STWD is scheduled to report quarterly figures on May 4. Over the past month, the Zacks Consensus Estimate for STWD’s quarterly earnings has been unchanged, implying a 35.5% fall from the prior-year reported number.

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STARWOOD PROPERTY TRUST, INC. (STWD) : Free Stock Analysis Report

Annaly Capital Management Inc (NLY) : Free Stock Analysis Report

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