American Capital Agency Corp. (AGNC) is riding on the growth trajectory. This mortgage real estate investment trust (commonly known as mREIT), which reported encouraging first-quarter 2014 results with its adjusted net spread income per share comfortably exceeding the Zacks Consensus Estimate, is currently carrying a Zacks Rank #2 (Buy).
Moreover, American Capital Agency’s first-quarter results compared favorably with the prior-quarter figure, reflecting an uptick in dollar roll income as well as dividends and gains from mREIT equity investments. The company’s concerted efforts toward portfolio repositioning and shrinking of its capital base by share repurchases, aided its results.
In order to meet the current interest rate environment, American Capital Agency has been taking measures to restructure its portfolio. Moreover, the company is witnessing a recovery in book value and remains positive on the outlook for agency mortgage-backed securities (MBS) market.
With short-term interest rates likely to remain low and the Fed seconding that view, we believe that American Capital Agency is set to benefit in the near term. However, it bears long-term risk as interest rates will eventually rise.
To gain a deeper insight into American Capital Agency, you can refer to our updated research report issued on Jul 18, 2014.
Analysts also present a bullish outlook on the stock. Over the past 30 days, the Zacks Consensus Estimate for 2014 and 2015 moved north by 1.7% and 1.2% to $1.76 and $2.57 per share, respectively.
Further, American Capital Agency is slated to release its second-quarter results after the market closes on Jul 28. The Zacks Consensus Estimate is currently pegged at 66 cents.
The company’s Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +6.06%. This, along with a Zacks Rank #2, makes us confident of a positive earnings beat.
Stocks That Warrant a Look
Investors interested in the REIT industry may also consider stocks like Apollo Commercial Real Estate Finance, Inc. (ARI), CYS Investments, Inc. (CYS) and Two Harbors Investment Corp. (TWO). All these stocks carry a Zacks Rank #2.
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