Annaly Capital Management Inc. NLY is scheduled to report first-quarter 2025 results on April 30, after market close. The company’s results are expected to reflect year-over-year growth in net interest income (NII) and earnings in the quarter to be reported.

NLY's peer AGNC Investment AGNC announced its quarterly numbers on April 21, whereas Arbor Realty Trust ABR is expected to release its performance details on May 2.

In the last reported quarter, Annaly’s adjusted earnings available for distribution surpassed the Zacks Consensus Estimate. Improvements in the average yield on interest-earning assets supported the results. However, NLY recorded a year-over-year decline in book value per share.

Annaly has a decent earnings surprise history. Its earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, matched on one occasion and missed once, the average surprise being 2.25%. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Earnings Surprise History

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Let us check out how NLY is expected to fare in terms of revenues and earnings this time around.

The Zacks Consensus Estimate for NLY’s first-quarter earnings of 71 cents per share has been revised upward in the past seven days. The figure indicates a 10.9% increase from the year-ago reported number.

Estimate Revision Trend

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The consensus estimate for NII is pegged at $409 million, indicating a significant year-over-year rise from negative $6.45 million.

Key Factors & Estimates for NLY in Q1

The 30-year fixed mortgage rates decreased to 6.65% as of the end of first-quarter 2025 from 6.85% as of fourth-quarter 2024, given a decrease in treasury yields during the quarter as spreads remained pretty stable. With this, mortgage REITs like Annaly’s tangible book value are likely to be relatively stable in the first quarter.

In the first quarter of 2025, mortgage rates were range-bound and hovered near the 7% mark. As such, refinancing activities and origination volumes witnessed decent growth. A decent refinancing activity is expected to have positively impacted net premium amortization in the first quarter, thereby supporting growth in interest income and average asset yield.

In the first quarter of 2025, the primary-secondary spread was slightly skewed due to increased volatility in the market. Hence, Annaly’s gain on sale margins in the first quarter will be relatively steady in the quarter to be reported.

Given the relatively lower prepayment speed, the company’s mortgage servicing rights (MSR) portfolio is likely to have been positively impacted to some extent. This is likely to have increased NLY's servicing fees in the quarter to be reported.

The Zacks Consensus Estimate for net servicing income of $104 million indicates a year-over-year marginal rise.

What the Zacks Model Reveals for Annaly

Our proven model conclusively predicts that NLY will beat the Zacks Consensus Estimate this time around. This is because the company has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: Annaly has an Earnings ESP of +3.55%.

Zacks Rank: Annaly currently carries a Zacks Rank of 2.

NLY’s Price Performance & Valuation

Annaly outperformed the industry in the first quarter of 2025. Its peer, AGNC Investment, outperformed the industry, while Arbor Realty Trust underperformed in the same time frame.

Price Performance

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Let us look at the value Annaly offers investors at present.

Currently, the NLY stock is trading at 0.95X forward 12 months price/tangible book TTM (P/TB TTM), below its median level of 0.97X and the industry’s P/TB TTM multiple of 0.88X. The company’s valuation looks somewhat expensive compared with the industry average and its range.

Price-to-Tangible Book TTM

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AGNC Investment and Arbor Realty Trust are trading at forward P/TB TTM multiples of 1.00X and 0.96X, respectively.

How to Play Annaly’s Stock Now?

One of NLY's main advantages is its well-diversified capital allocation approach. The company's investment portfolio includes residential credit, MSR, and agency mortgage-backed securities. This comprehensive strategy aims to lower volatility and sensitivity to interest rate changes while simultaneously generating appealing risk-adjusted returns.

Annaly's diversified investment strategy will likely be a key contributor to long-term growth and stability. By diversifying its investments across the mortgage market, the company is better positioned to capitalize on opportunities as they occur in multiple areas while limiting the risks associated with overexposure to any particular area.

The company is focused on improving its liquidity and reducing leverage. Till the end of the fourth quarter of 2024, NLY enjoyed a strong liquidity position. Annaly had an unencumbered asset portfolio, aggregating $5.8 billion, which can readily provide liquidity in times of adverse market conditions. A strong liquidity position allows the company to maintain its dividend policy and take advantage of market difficulties to acquire assets at attractive valuations.

On March 13, 2025, Annaly announced a cash dividend of 70 cents per share for the first quarter of 2025, marking a 7.7% hike from the prior payout. The dividend will be paid out on April 30, 2025, to shareholders of record as of March 31. This move reflects confidence in Annaly’s cash flow and growth prospects.

Hence, investors can consider investing in the NLY stock at its current level to earn higher dividends and generate healthy long-term returns.

Annaly currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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