AGNC(US:AGNC) ZACKSยท2025-07-16 16:31Core Insights - AGNC Investment Corp. is set to report its second-quarter 2025 earnings on July 21, with earnings per share (EPS) expected at 42 cents, reflecting a 20.8% decline year-over-year [1][3][6] - The company's first-quarter 2025 results showed an improvement in average asset yield, but its net book value per common share decreased compared to the prior-year quarter [1][6] - AGNC's earnings history indicates it outperformed the Zacks Consensus Estimate once in the last four quarters, missed twice, and matched once, with an average negative surprise of 3.27% [1][2] Earnings and Revenue Estimates - The consensus estimate for AGNC's revenues is $254.2 million, a significant increase from negative revenues of $3 million reported in the same quarter last year [4][7] - Interest income is projected to rise by 4.5% due to higher prepayment rates and net premium amortization [6][7] Market Trends and Performance - Despite interest rate cuts by the Federal Reserve in 2024, mortgage rates remained stable in the mid-to-upper 6% range, leading to growth in refinancing activities and origination volumes [5][6] - The primary-secondary spread averaged 1.06% in Q2 2025, slightly lower than the previous quarter's average of 1.12%, indicating market volatility [8][9] Valuation and Investment Outlook - AGNC's stock is currently trading at 1.08X forward 12 months price/tangible book TTM, which is above the industry average of 0.98X, suggesting a relatively expensive valuation [16][19] - The company offers a high dividend yield of 15.47%, significantly above the industry average of 11.8%, making it an attractive option for income-seeking investors [21] Strategic Positioning - AGNC is positioned to benefit from an active portfolio-management policy, focusing on leveraged investments in Agency residential mortgage-backed securities (MBS) [20] - Expected interest rate cuts in 2025 may enhance AGNC's net interest spread and book value, providing a potential boost to its stock performance [21]