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Annaly Capital Stock Dips 2% on Q1 Earnings Miss

By Eric Volkman - Updated May 1, 2020 at 8:39AM

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A volatile market drove down the quarter's earnings.

Shares of Annaly Capital Management (NLY 0.02%) fell slightly on Thursday on the back of first-quarter results that showed deterioration in several of the company's key financials.

Annaly Capital posted adjusted (or "core") net earnings of just over $330 million, or $0.21 per share, well down from the $433 million it reaped in the same quarter one year ago. Total interest income also fell notably, dropping to slightly more than $555 million from the Q1 2019 tally of $866 million.

Scale with house on one side and bag of money on the other.

Image source: Getty Images.

On average, the analysts covering Annaly Capital stock were expecting a per-share adjusted net profit of just under $0.26 per share.

The company is one of the more-prominent mortgage real estate investment trusts (mREITs). These differ from the far more numerous equity REITs in that they do not directly invest in property. Instead, their portfolios consist of pools of mortgages and mortgage-backed securities, and related instruments. 

Historically, the vast majority of Annaly Capital's holdings have been "agency" mortgage-backed securities, meaning paper that is issued by federal agencies tasked with supporting the mortgage market, such as Freddie Mac and Fannie Mae. These are considered to be some of the most secure instruments of their kind available, as the mortgages underpinning them are backed by guarantees from those agencies.

Characteristically, in Q1 93% of the company's nearly $100 billion overall portfolio consisted of these securities.

Annaly Capital stock dipped by just over 2% on Thursday, a decline that slightly exceeded that of most equities indexes on the day.  

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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