Professional Documents
Culture Documents
P/S (TTM) NA
Magnitude Consensus Estimate Trend (60 days)
P/CFO 5.56
Growth Score
Proj. EPS Growth (F1/F0) 1.99% 60 30 7 Current 60 30 7 Current 60 30 7 Current 60 30 7 Current
Days Days Days Days Days Days Days Days Days Days Days Days
Hist. EPS Growth (Q0/Q-1) -10.48% Q1 +3.57% Q2 0% F1 0% F2 +0.82%
Qtr CFO Growth NA
2 Yr CFO Growth NA
Upside Zacks Consensus Estimate vs. Most Accurate Estimate
Return on Equity (ROE) 11.85%
Momentum Score Most Accurate: 0.29 Most Accurate: 0.29 Most Accurate: 1.20 Most Accurate: 1.23
Zacks Consensus: 0.29 Zacks Consensus: 0.29 Zacks Consensus: 1.20 Zacks Consensus: 1.23
1 week Volume change NA%
Q1 0.00% Q2 0.00% F1 0.00% F2 0.00%
1 week Price Cng Rel to Industry -0.06%
Reported: 0.30 Reported: 0.30 Reported: 0.31 Reported: 0.30 Average 4 Qtr
Surprise
Estimate: 0.29 Estimate: 0.30 Estimate: 0.30 Estimate: 0.30
Q End 09/17 Q End 06/17 Q End 03/17 Q End 12/16
© 2017 Zacks Investment Research, All Rights Reserved 10 S. Riverside Plaza Suite 1600 · Chicago, IL 60606
The data on the front page and all the charts in the report represent market data as of 11/03/17, while the reports text is as of
11/06/2017
Overview
Annaly Capital Management, Inc. is a mortgage real estate
investment trust (mREIT) that primarily owns, manages and
finances a portfolio of real estate related investment securities.
Its investment portfolio includes agency MBS, agency pass-
through certificates, collateralized mortgage obligations (CMOs),
interest-only securities and credit risk transfer (CRT). The
company’s investment may also comprise agency debentures,
to-be-announced forward contracts (TBAs), other securities,
commercial real estate assets and corporate debt.
Despite turbulent market conditions in the past, Annaly continued to pay the same dividend of 30 cents per share for the 16th
consecutive quarter and maintained a decent return on equity. Given the company’s financial position and lower debt-to-equity ratio
compared to that of the industry, this dividend payout is expected to be sustainable.
Annaly enjoys a diverse funding profile in the industry. The company’s approximately $9.6 billion high-quality unencumbered assets
provide adequate capital buffer. Its main sources of financing are repurchase agreements and various forms of equity. Annaly enters
into repurchase agreements primarily with national broker-dealers, commercial banks and other lenders that typically offer financing
for agency MBS. Moreover, RCap, the company’s wholly owned subsidiary, enters into repurchase contracts on behalf of the
company. This helps the company enjoy flexibility in the opportunistic enhancement of its portfolio.
Shares of Annaly have outperformed its industry year to date, gaining 12.6% as against the industry’s growth of 4.6%. Further, the
Zacks Consensus Estimates for fourth-quarter 2017 and current-year earnings have been revised 3.6% and 0.8% upward in a
week’s time.
Reasons To Sell:
Annaly operates in a highly competitive market. It has to compete with other financial Competition with several
institutions, institutional investors, lenders, government bodies and mortgage REITs to players and adverse
acquire assets in target markets, which adversely affect the pricing of securities. macro-economic
conditions remain a
Operating performance of mREITs, including Annaly depend upon conditions prevailing concern. A rise in rate of
in the MBS and broader financial markets, as well as on the macro economic situation. interest may further add to
Adverse financial market conditions may result into de-leveraging of the global financial its woes.
system and the forced sale of mortgage assets. Further, concerns over economic
downturn, geopolitical issues and unemployment may lead to increased volatility in the
market.
We believe that due to interest rate hike, the company may have to face higher borrowing cost and this will likely have adverse
effects on the company’s growth prospects going forward.
Net interest income (NII) in the third quarter totaled $353.6 million, representing year-over-
year decline of 0.8%.
Quarter in Detail
In the reported quarter, average yield on interest-earning assets excluding premium amortization adjustment (PAA) was 2.97%, up 25
basis points (bps) year over year.
Net interest rate spread (excluding PAA) of 1.15% for the quarter remained unchanged year over year. Net interest margin (excluding
PAA) came in at 1.47% compared with 1.42% recorded in the year-earlier period.
The company’s investment at fair value (including Agency mortgage-backed securities and Agency debentures) was $85.8 billion as of
Sep 30, 2017, up from $74 billion as of Sep 30, 2016.
Annaly’s book value per share came in at $11.42 as of Sep 30, 2017, compared with $11.19 as of Jun 30, 2017. At the end of the third
quarter, the company’s capital ratio (representing the ratio of stockholders’ equity to total assets) was 12.3%, compared to 13.3% as
Leverage was 5:4:1 as of Sep 30, 2017, compared with 5.3:1 as of Sep 30, 2016. The company offered an annualized core return on
average equity of 10.57% in the reported quarter, up from 10.09% in the year-ago period.
Recent News
Annaly Announces Public Offering of 65 Million Shares — Oct 6, 2017
Annaly announced pricing of a public offering of 65 million shares of common stock. The underwriters will get a 30-day option to
purchase up to an additional 9.75 million shares. The underwriters proposed the prevailing market price at the time of sale or negotiated
price for selling the stock from time to time.
The company expects to raise approximately $780 million, before making adjustments for estimated offering expenses.
Annaly plans spend the proceeds for targeted asset acquisitions under its capital allocation policy. It will also be used for general
corporate purposes, which may include trimming Annaly’s liabilities and working capital items. This public offering will help in
diversifying the company’s investment options. In fact, as part of the diversification strategy, it will allocate a chunk of the
stockholders’ equity in a variety of assets.
It may expand its Agency, residential, commercial and corporate credit assets investment such as middle market corporate loans,
residential mortgage loans, Agency MBS pools, adjustable rate mortgages, TBA forward contracts, commercial real estate loans and
securities and mortgage servicing rights.
Annaly Closes Common and Preference Stock Offering – Jul 31, 2017
Annaly announced that it has closed the common and preferred stock offering through which it raised approximately $1.5 billion gross
proceeds. This amount is before making any adjustments for offering expenses.
Underwriter’s option on the previously announced offering of 60 million shares were fully exercised, helping the company raise an
additional nine million common shares. The company raised around $816 million from this additional issue.
The company also raised gross proceeds of approximately $700 million and closed the public offering of 28 million shares of its 6.95%
Series F Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock.
Dividend Update
On Sep 14, Annaly announced third-quarter 2017 cash dividend of 30 cents per share. This dividend was paid on Oct 31 to
shareholders of record as of Sep 29, 2017.
Industry Comparison Reit And Equity Trust | Position in Industry: 9 of 28 Industry Peers
Growth Score - -
Hist. EPS Growth (3-5 yrs) -10.48% -4.36% 6.83% 0.10 0.36 0.05
Proj. EPS Growth (F1/F0) 1.99% -4.84% 9.75% 19.50 4.61 23.36
Curr. Cash Flow Growth -2.52% -3.28% 5.63% 6.56 0.47 NA
Hist. Cash Flow Growth (3-5 yrs) -7.71% 27.27% 6.86% 1.15 7.15 0.95
Current Ratio 0.03 1.97 1.35 NA 2.75 7.40
Debt/Capital 21.43% 56.71% 41.77% 6.56 9.42 7.84
Net Margin 104.56% 56.81% 10.21% 3.61 0.49 3.10
Return on Equity 11.85% 10.24% 15.69% 15.26% 10.61% 12.75%
Sales/Assets 0.03 0.04 0.54 0.00 6.46 2.73
Proj. Sales Growth (F1/F0) 0.00% 0.00% 5.58% -0.94 9.32 2.45
Value Score - -
Cash/Price 0.05 0.16 0.05 38.70% -4.36% 7.28%
EV/EBITDA 7.42 16.93 13.07 24.65% -40.74% -4.15%
PEG Ratio NA 1.90 2.07 73.53% -21.05% -6.78%
Price/Book (P/B) 1.06 0.93 3.16 NA 15.74% 38.83%
Price/Cash Flow (P/CF) 5.56 7.40 14.11 0.34 2.57 0.04
P/E (F1) 9.41 10.03 19.62 0.00% 86.60% 73.21%
Price/Sales (P/S) 5.07 3.86 2.50 60.06% 0.23% 58.21%
Earnings Yield 10.60% 9.95% 5.06% 19.38% 81.23% 13.53%
Debt/Equity 0.30 1.26 0.70 0.07 1.48 0.06
Cash Flow ($/share) 2.02 1.93 5.46 34.30% -5.94% 0.00%
Momentum Score - -
Daily Price Chg -0.53% -0.13% 0.11% -0.06% -2.99% -1.31%
1 Week Price Chg -0.06% -0.03% -0.00% 0.02% -0.04% -0.03%
4 Week Price Chg -9.29% -5.27% 0.62% 1.33% -6.08% -5.13%
12 Week Price Chg -8.48% -3.59% 6.05% 6.06% 9.81% -3.82%
52 Week Price Chg 9.99% 5.56% 21.99% 26.08% 5.08% 11.37%
20 Day Average Volume 13,683,798 289,982 2,036,144 2,223,079 120,845 819,687
(F1) EPS Est Wkly Chg 0.28% 0.00% 0.00% 1.23% -3.89% 0.00%
(F1) EPS Est Mthly Chg 0.00% 0.00% 0.17% 1.23% -3.89% 0.00%
(F1) EPS Est Qtrly Chg 1.42% 0.65% 0.33% 8.88% 5.02% 0.00%
(Q1) EPS Est Mthly Chg 1.79% 0.00% 0.00% 0.00% -10.74% 0.00%
Agreement
This is the extent which brokerage analysts are revising their earnings estimates in the same
direction. The greater the percentage of estimates being revised higher, the better the score for this
component.
For example, if there were 10 estimate revisions over the last 60 days, with 8 of those revisions up,
and the other 2 down, then the agreement factor would be 80% positive. If, however, 8 were to the
downside with only 2 of them up, then the agreement factor would be 80% negative. The higher the
percentage of agreement the better.
Magnitude
This is a measure based on the size of the recent change in the current consensus estimates. The
Zacks Rank looks at the magnitude of these changes over the last 60 days.
In the chart to the right, the display shows the consensus estimate from 60-days ago, 30-days ago,
7-days ago, and the most current estimate The difference between the current estimate and the
estimate from 60-days ago is displayed as a percentage. A larger positive percentage increase will
score better on this component.
Upside
This is the difference between the most accurate estimate, as calculated by Zacks, and the
consensus estimate. For example, a stock with a consensus estimate of $1.00, and a most
accurate estimate of $1.05 will have an upside factor of 5%.
This is not an indication of how much a stock will go up or down. Instead, it's a measure of the
difference between these two estimates. This is particularly useful near earnings season as a
positive upside percentage can be used to help predict a future surprise.
Surprise
The Zacks Rank also factors in the last few quarters of earnings surprises. Companies that have
positively surprised in the recent past have a tendency of positively surprising again in the future (or
missing if they recently missed).
A stock with a recent track record of positive surprises will score better on this factor than a stock
with a history of negative surprises. These stocks will have a greater likelihood of positively
surprising again.
Academic research has proven that stocks with the best Growth, Value, and Momentum Growth Score
characteristics outperform the market. The Zacks Style Scores rate stocks on each of these Momentum Score
individual styles and assigns a rating of A, B, C, D and F. An A, is better than a B; a B is better than
a C; and so on. VGM Score
As an investor, you want to buy stocks with the highest probability of success. That means buying
stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Style Score of an A or a B.