We initiated our research report on Annaly Capital Management, Inc. NLY on Jun 24, 2015.
This New York-based mortgage real estate investment trust (mREIT) has over 75% of its portfolio in the form of high-quality (AA+ or better) mortgage-backed securities (“MBS”) and short-term investments. Further, Annaly’s prudent investment strategy includes investment in traditional agency MBS as well as more credit-focused asset classes, ensuring better returns for its shareholders.
Also, Annaly has a robust financial position, as it maintains excess liquidity through investment in high-quality unencumbered assets, which serve as capital buffer. With repurchase agreements and various forms of equity as its main sources of financing, the company enjoys flexibility in the opportunistic enhancement of its portfolio.
Annaly reported first-quarter 2015 core earnings of 25 cents per share, missing the Zacks Consensus Estimate by 5 cents. However, the bottom line came in 2 cents higher than the prior-year quarter figure.
Competition with several players such as other financial institutions, institutional investors, lenders, government bodies and mortgage REITs remain a concern before the company. Further, adverse macroeconomic conditions and an anticipated rise in rate of interest may add to its woes.
Over the past 30 days, the Zacks Consensus Estimate for 2015 has edged down 0.9% to $1.08 per share; while for 2016, it has moved up 1% to $1.06 per share. The stock currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Investors interested in the mREIT industry may consider stocks like iStar Financial Inc. STAR, MFA Financial, Inc. MFA and Walter Investment Management Corp. WAC. All three stocks sport a Zacks Rank #1 (Strong Buy).
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