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Why AGNC Investment (AGNC) Might be Well Poised for a Surge

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·2 min read
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AGNC Investment (AGNC) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company.

The upward trend in estimate revisions for this real estate investment trust reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

Consensus earnings estimates for the next quarter and full year have moved considerably higher for AGNC Investment, as there has been strong agreement among the covering analysts in raising estimates.

The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate Revisions

The company is expected to earn $0.59 per share for the current quarter, which represents a year-over-year change of +3.51%.

Over the last 30 days, the Zacks Consensus Estimate for AGNC Investment has increased 15.69% because two estimates have moved higher compared to no negative revisions.

Current-Year Estimate Revisions

For the full year, the earnings estimate of $2.47 per share represents a change of +14.35% from the year-ago number.

The revisions trend for the current year also appears quite promising for AGNC Investment, with two estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 11.66%.

Favorable Zacks Rank

The promising estimate revisions have helped AGNC Investment earn a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

While strong estimate revisions for AGNC Investment have attracted decent investments and pushed the stock 5.9% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.


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Zacks Investment Research