Annaly is Set to Report Q2 Earnings: What's in Store for the Stock?

Core Viewpoint - Annaly Capital Management Inc. (NLY) is expected to report year-over-year growth in earnings and net interest income (NII) for the second quarter of 2025, with results anticipated on July 23, after market close [1][10]. Financial Performance - In the last reported quarter, Annaly posted earnings available for distribution per share of 72 cents, exceeding the Zacks Consensus Estimate, supported by improvements in the average yield on interest-earning assets [2]. - The consensus estimate for second-quarter NII is projected at $410.5 million, indicating a significant increase from the year-ago quarter's reported NII of $53.6 million [5]. - The Zacks Consensus Estimate for earnings remains unchanged at 71 cents, reflecting a year-over-year rise of 4.4% [11]. Market Conditions - 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 [4]. - The primary-secondary spread averaged 1.06% in the second quarter of 2025, slightly lower than the first quarter's average of 1.12% [6]. Asset Management - A significant portion of NLY's mortgage-backed securities (MBS) holdings is expected to have experienced elevated levels of constant prepayment rates, positively impacting net premium amortization and supporting growth in interest income and average asset yield [5][10]. - The net servicing income consensus estimate of $121 million suggests a year-over-year increase of 13% [8]. Earnings Surprise History - Annaly has a strong earnings surprise history, beating the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 2.60% [3]. Earnings Prediction Model - The current model indicates that an earnings beat is unlikely for NLY this time, as it lacks the necessary combination of a positive Earnings ESP and a Zacks Rank higher than 3 [9].