Why Is Annaly (NLY) Down 3% Since Last Earnings Report?

Core Viewpoint - Annaly Capital Management reported a positive fourth-quarter earnings performance, surpassing estimates, but faced challenges in net interest income and has seen a downward trend in estimates recently [2][4][11]. Earnings Performance - For Q4 2025, Annaly reported earnings available for distribution (EAD) per share of 74 cents, exceeding the Zacks Consensus Estimate of 72 cents and up from 72 cents in the previous year [2]. - The annual EAD per share for 2025 was $2.92, beating the Zacks Consensus Estimate of $2.90 and improving from $2.70 in the prior year [3]. Financial Metrics - Net interest income (NII) for Q4 was $366.6 million, missing the Zacks Consensus Estimate by 21.8%, compared to $187.3 million in the prior-year quarter [4]. - For the full year 2025, NII totaled $1.13 billion, falling short of the Zacks Consensus Estimate of $1.24 billion, with a prior year NII of $247.8 million [4]. - The average yield on interest-earning assets was 5.44%, up from 5.26% in the previous year, while the average economic cost of interest-bearing liabilities increased to 3.95% from 3.79% [5]. Book Value and Ratios - Annaly's book value per share (BVPS) as of December 31, 2025, was $20.21, an increase from $19.15 in the prior year [6]. - The economic capital ratio improved to 14.9% from 14.8% year-over-year, and economic leverage was 5.6X, up from 5.5X [6]. Returns and Scores - The annualized EAD return on average equity for Q4 was 14.28%, slightly up from 14.27% in the prior year [7]. - Annaly has a subpar Growth Score of D, but a better Momentum Score of B, and a value score of B, placing it in the second quintile for value investors [9][10]. Outlook - Estimates for Annaly have been trending downward, indicating a potential shift in market sentiment, with a Zacks Rank of 3 (Hold) suggesting an expectation of in-line returns in the coming months [8][11].