A month has gone by since the last earnings report for Annaly Capital Management (NLY). Shares have added about 0.4% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Annaly due for a pullback? 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 catalysts.

Annaly Q3 Earnings Miss Expectations, Book Value Declines Y/Y

Annaly reported third-quarter 2024 adjusted earnings available for distribution (EAD) per average share of 66 cents, which missed the Zacks Consensus Estimate of 67 cents. The reported figure remained unchanged from the year-ago quarter.

NLY recorded a year-over-year decline in book value per share (BVPS). Nonetheless, the company’s average yield on interest-earning assets improved in the reported quarter.

Inside Annaly’s Headlines

Net interest income (NII) was $13.4 million in the reported quarter. In the prior-year quarter, the company reported a negative $45.3 million in NII.
At the third-quarter end, Annaly had $101.5 billion of total assets, up 8.4% from the prior quarter.

In the reported quarter, the average yield on interest-earning assets (excluding premium amortization adjustment or PAA) was 5.25%, up from the prior-year quarter’s 4.46%. The average economic costs of interest-bearing liabilities were 3.93%, up from 3.28% in the year-ago quarter.

Net interest spread (excluding PAA) of 1.32% in the third quarter fell from 1.18% in the prior-year quarter. Also, the net interest margin (excluding PAA) was 1.52% compared with 1.48% in the third quarter of 2023.

Annaly’s BVPS was $19.54 as of Sept. 30, 2024, down 7.1% from $18.25 reported in the prior-year quarter. At the end of the reported quarter, the company’s economic capital ratio was 14.6%, up from 13.1% in the prior-year quarter.

In the third quarter, the weighted average actual constant prepayment rate was 7.6%, up from 7.3% in the year-ago quarter.

Economic leverage was 5.7X as of Sept. 30, 2024, down from 5.8X sequentially and 6.4X year over year. Annaly generated an annualized EAD return on average equity of 12.95% in the third quarter, which decreased from the prior-year quarter’s 12.96%.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

Currently, Annaly has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, 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 these revisions indicates a downward shift. Notably, Annaly has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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