Why Is AGNC Investment (AGNC) Down 9% Since Last Earnings Report?
It has been about a month since the last earnings report for AGNC Investment (AGNC). Shares have lost about 9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is AGNC Investment due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
AGNC Investment Beats on Q2 Net Spread and Dollar Roll
AGNC Investment’s second-quarter 2023 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization costs) of 67 cents beat the Zacks Consensus Estimate of 58 cents. However, the bottom line declined 19.3% from the prior-year quarter.
Adjusted net interest and dollar roll income (excluding estimated "catch-up" premium amortization costs) of $493 million remained flat from the quarter-ago levels.
The company reported second-quarter comprehensive income per common share of 32 cents against the prior-year quarter’s loss of $1.34.
Inside the Headlines
Net interest income was negative $69 million against $315 million in the year-ago quarter. The Zacks Consensus Estimate was pegged at $342 million.
AGNC Investment's average asset yield on its portfolio was 3.72 % in the second quarter, up from 3.09% in the prior-year quarter.
The combined weighted average cost of funds, inclusive of interest rate swap, was 0.63% compared with 0.14% in the year-ago quarter.
The average net interest spread (excluding estimated "catch-up" premium amortization costs) was 3.26%, up from 2.74% reported in the year-earlier quarter.
As of Jun 30, 2023, AGNC’s average tangible net book value "at risk" leverage ratio was 7.2 compared with 7.8 in the prior-year quarter.
In the second quarter, the company's investment portfolio bore an average actual constant prepayment rate of 6.6%, down from 12.4% in the previous-year quarter.
As of Jun 30, 2023, tangible net book value per common share (BVPS) was $9.39, down from $11.43 as of Jun 30, 2022.
The economic return on tangible common equity was 3.6%. This included a dividend per share of 36 cents and a decrease of 2 cents in tangible net BVPS.
As of Jun 30, 2023, the company’s investment portfolio aggregated $58 billion. This included $46.7 billion of Agency mortgage-backed securities, $10.2 million of net to-be-announced mortgage position, and $1.1 billion of credit risk transfer and non-Agency securities.
As of Jun 30, 2023, AGNC Investment’s cash and cash equivalents totaled $716 million, down from $975 million as of Mar 31, 2023.
Dividend Update
In the second quarter, AGNC Investment announced a dividend of 12 cents per share each for April, May and June. Notably, management declared $12.4 billion in common stock dividends or $46.48 per common share since its initial public offering in May 2008 through second-quarter 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, AGNC Investment has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision has been net zero. Notably, AGNC Investment has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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AGNC Investment Corp. (AGNC) : Free Stock Analysis Report
