Annaly Set to Report Q4 Earnings: What's in Store for the Stock?

Core Viewpoint - Annaly Capital Management Inc. (NLY) is set to report its fourth-quarter 2025 results on January 28, with expectations of a significant year-over-year increase in net interest income (NII) while earnings are projected to remain unchanged [1][8]. Financial Performance - The consensus estimate for fourth-quarter NII is $469 million, indicating a rise from the previous year's NII of $187.3 million [3]. - Earnings per share (EPS) estimates have remained unchanged at 72 cents, reflecting no change from the year-ago quarter [3]. Market Conditions - The Federal Reserve's two interest rate cuts in the fourth quarter have led to a decrease in mortgage rates, resulting in increased refinancing activities and origination volumes [4]. - A significant portion of NLY's mortgage-backed securities (MBS) holdings is expected to have experienced elevated prepayment rates, positively impacting net premium amortization and supporting growth in interest income and average asset yield [5]. Servicing Income - Slower prepayment speeds are likely to have positively affected the company's mortgage servicing rights portfolio, which is anticipated to increase servicing fees in the upcoming quarter [6]. - The Zacks Consensus Estimate for net servicing income is projected at $137.4 million, representing a year-over-year increase of 18.9% [6]. Earnings Surprise Potential - The current model indicates that an earnings beat is unlikely for NLY, as it lacks the necessary combination of a positive Earnings ESP and a Zacks Rank higher than 3 [7]. - Annaly currently holds a Zacks Rank of 3, indicating a hold position [9].