In the latest trading session, Annaly Capital Management (NLY) closed at $21.61, marking a -0.32% move from the previous day. This change lagged the S&P 500's daily gain of 1.77%. Elsewhere, the Dow saw an upswing of 1.42%, while the tech-heavy Nasdaq appreciated by 2.28%.The the stock of real estate investment trust has risen by 0.23% in the past month, leading the Finance sector's loss of 1.46% and the S&P 500's loss of 5.73%.Market participants will be closely following the financial results of Annaly Ca ...

Harrison is a financial analyst who has been writing on Seeking Alpha since 2018 and has closely followed the market for over a decade. He has professional experience in the private equity, real estate, and economic research industry. Harrison also has an academic background in financial econometrics, economic forecasting, and global monetary economics.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such position ...

Core Viewpoint - Annaly Capital Management, Inc. (NLY) announced a cash dividend of 70 cents per share for Q1 2025, representing a 7.7% increase from the previous payout, and the stock rose 2.4% following the announcement [1] Dividend Information - The dividend will be paid on April 30, 2025, to shareholders of record as of March 31 [1] - In March 2023, the company reduced its dividend by 26% to 65 cents [2] - Currently, NLY's payout ratio stands at 96% of its earnings, with an annual dividend yield of 12.03% based on a closing price of $21.61 [2] Capital Distribution Activities - On December 31, 2024, the board authorized a share repurchase program allowing up to $1.5 billion in buybacks, but no shares have been repurchased since the announcement [3] Liquidity and Leverage - Annaly is focused on improving liquidity and reducing leverage, with a strong liquidity position as of Q4 2024 [4] - The company has an unencumbered asset portfolio totaling $5.8 billion, which can provide liquidity during adverse market conditions [4] - A strong balance sheet is expected to support sustainable capital distributions [4] Price Performance - Over the past year, NLY shares have increased by 26.7%, outperforming the industry growth of 8.8% [5] Zacks Rank - Annaly currently holds a Zacks Rank 2 (Buy) [7]

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Group 1 - Annaly Capital Management (NLY) closed at $21.69, with a daily increase of +1.31%, outperforming the S&P 500's gain of 1.12% [1] - Over the past month, NLY shares have risen by 4.44%, while the Finance sector and S&P 500 have decreased by 1.89% and 4.13%, respectively [1] Group 2 - The upcoming earnings report for Annaly Capital Management is expected to show an EPS of $0.70, reflecting a 9.38% increase year-over-year, with projected revenue of $275 million, up 4363.57% from the previous year [2] - For the full year, earnings are projected at $2.81 per share and revenue at $1.15 billion, indicating increases of +4.07% and +364.09% from the prior year [3] Group 3 - Recent revisions to analyst forecasts for Annaly Capital Management are important as they indicate short-term business trends and analyst sentiment regarding the company's profitability [4] - The Zacks Rank system, which reflects these estimate changes, currently ranks Annaly Capital Management as 1 (Strong Buy), with a consensus EPS projection that has increased by 1.72% in the last 30 days [6] Group 4 - Annaly Capital Management has a Forward P/E ratio of 7.61, which is lower than the industry average of 8.63, and a PEG ratio of 4.82 compared to the industry average of 2.97 [7] - The REIT and Equity Trust industry, which includes Annaly Capital Management, has a Zacks Industry Rank of 191, placing it in the bottom 24% of over 250 industries [8]

Core Insights - Annaly Capital Management's fourth-quarter 2024 adjusted earnings per share (EAD) were 72 cents, surpassing the Zacks Consensus Estimate of 67 cents and increasing from 68 cents in the previous year [2] - The company's book value per share (BVPS) declined year-over-year to $19.15, down 1.5% from $19.44 [6] - Annaly's net interest income (NII) for the reported quarter was $187.3 million, missing the Zacks Consensus Estimate of $242 million, but improved from a negative $53.6 million in the prior-year quarter [4] Financial Performance - For the full year 2024, adjusted EAD per share was $2.7, beating the Zacks Consensus Estimate of $2.66, but lower than $2.86 reported in the previous year [2] - The average yield on interest-earning assets increased to 5.26% from 4.64% year-over-year, while the average economic costs of interest-bearing liabilities rose to 3.79% from 3.42% [5] - The net interest spread (excluding premium amortization adjustment) improved to 1.47% from 1.22% in the prior-year quarter, and the net interest margin increased to 1.71% compared to 1.58% in the fourth quarter of 2023 [5] Asset and Capital Management - Annaly's total assets reached $103.6 billion, reflecting a 2% increase from the prior quarter [4] - The economic capital ratio improved to 14.6%, up from 14% in the previous year [6] - Economic leverage decreased to 5.5X as of December 31, 2024, down from 5.7X sequentially and year-over-year [6] Market Position and Outlook - Estimates for Annaly have been trending upward, leading to a Zacks Rank of 1 (Strong Buy), indicating expectations for above-average returns in the coming months [11] - The company generated an annualized EAD return on average equity of 14.27% in the fourth quarter, an increase from 13.76% in the prior-year quarter [7] - Annaly's VGM Score reflects a poor Growth Score of F, a Momentum Score of B, and an overall aggregate score of D [9][10]

Group 1 - Annaly Capital Management Inc (NLY) has reached a key level of support and is showing potential for a bullish breakout due to a "golden cross" formation, where the 50-day simple moving average has crossed above the 200-day simple moving average [1] - The golden cross indicates a positive trend reversal after a downtrend, suggesting that NLY could continue to gain momentum towards higher prices [2] - NLY shares have increased by 6.2% over the past four weeks, and the company holds a 1 (Strong Buy) rating on the Zacks Rank, indicating strong bullish sentiment [3] Group 2 - There have been three upward revisions in earnings estimates for NLY over the past 60 days, with no downward revisions, leading to an improved Zacks Consensus Estimate for the current quarter [3] - The combination of positive earnings outlook and technical indicators suggests that investors may want to monitor NLY for potential gains in the near future [4]

Portfolio Composition and Capital Structure - As of December 31, 2024, the portfolio composition included 87% Agency assets, 9% Residential Credit, and 4% Mortgage Servicing Rights (MSR) with respective capital allocations of 59%, 22%, and 19%[25]. - The company had $65.7 billion in repurchase agreements outstanding as of December 31, 2024, indicating significant leverage in financing its investments[34]. - The economic leverage ratio was 5.5:1 as of December 31, 2024, compared to 5.7:1 in 2023, reflecting a conservative approach to leverage management[40]. - The capital structure includes a mix of debt and equity funding, with a focus on maintaining liquidity and meeting financial obligations during market stress[32]. - The company aims to maintain an economic leverage ratio no greater than 10:1, with actual ratios consistently below 8:1 since the financial crisis[38]. Investment and Risk Management - The company issued 21 OBX securitizations backed by $11.0 billion of residential whole loans during the year ended December 31, 2024, demonstrating active capital market engagement[37]. - The company targets a diverse range of assets, including Agency MBS, residential mortgage loans, and MSR, to optimize risk-adjusted returns[31]. - The risk management framework includes a firm-wide risk appetite statement, focusing on income generation and capital preservation[26]. - The company is committed to effective risk management, focusing on identifying, measuring, and controlling key risks[44]. Human Capital and Diversity - As of December 31, 2024, Annaly Capital Management had 191 employees[51]. - 57% of the Operating Committee and 61% of the overall population identified as either female and/or racially/ethnically diverse[56]. - The company has hosted over 50 community building events in 2024 to promote diversity and inclusion[56]. - Annaly's employee compensation program includes base salary, annual incentive bonuses, and stock-based awards[58]. - The company offers a range of benefits including health coverage, 401(k) plans, and mental health support initiatives[60]. Regulatory and Compliance Risks - The company is subject to complex and evolving legal and regulatory requirements, which expose it to increased compliance and legal risks[89]. - The company has submitted a claim for no-action relief from the Commodity Pool Operator registration requirement, believing it meets the criteria set forth by the CFTC[72]. - The company operates as a licensed mortgage aggregator and master servicer, complying with various federal and state regulations[71]. - The company is subject to numerous federal and state data privacy laws, including the Gramm Leach Bliley Act, which regulates customer information confidentiality[150]. - The SEC has established a task force to address climate-related disclosures, which may impact the company's reporting and compliance obligations[146]. Financial Performance and Market Conditions - The company may incur substantial losses if borrowing costs increase due to its leverage strategy, which is fundamental to its investment approach[95]. - A significant portion of the company's assets are longer-term, fixed-rate interest earning assets, while a significant portion of its borrowings are shorter-term, floating-rate borrowings, which can adversely affect profitability during rising interest rates[106]. - Volatile market conditions for mortgages and mortgage-related assets can materially affect the company's results of operations and financial condition[102]. - The profitability of securitization transactions is significantly influenced by the prices investors are willing to pay for mortgage-backed securities, which are affected by market forces[123]. REIT Qualification and Tax Implications - The company intends to distribute at least 90% of its REIT taxable income to stockholders to maintain REIT status, aiming for 100% to avoid taxation[78]. - The company must maintain its qualification as a REIT, requiring at least 75% of gross income to come from real estate sources and 90% of REIT taxable income to be distributed to stockholders[160][164]. - Failure to maintain REIT status could result in significant income taxes, reducing available funds for investments and distributions, adversely affecting equity value[162]. - The company may face adverse tax consequences if it fails to maintain its qualification as a REIT[89]. Strategic Initiatives and Future Outlook - The company may enter into new lines of business or engage in strategic initiatives, including acquisitions[93]. - The company expects to increase its exposure to MSR-related investments in 2025, which are highly illiquid and subject to numerous restrictions[199]. - The company may experience volatility in its periodic net income due to accounting elections related to fair value changes of certain instruments[132]. - The company may be unable to profitably execute future securitization transactions due to competition and market conditions affecting mortgage loan pricing[122].

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Core Viewpoint - Mortgage REITs, particularly Annaly Capital Management, are experiencing fundamental improvements in investment spreads and have a positive investment outlook due to anticipated federal fund rate cuts in 2025 [1] Group 1 - Annaly Capital Management (NYSE: NLY) is highlighted as a key player in the mortgage REIT sector [1] - The investment outlook for mortgage REITs is favorable, driven by expected reductions in federal fund rates [1] - The improvements in investment spreads are a significant factor contributing to the positive outlook for these companies [1]