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AGNC Investment's (AGNC) Stock Down on Q3 Earnings Miss

AGNC Investment Corp. AGNC reported third-quarter 2017 net spread and dollar roll income of 59 cents per share, missing the Zacks Consensus Estimate of 63 cents. Also, the figure came in below the prior-quarter tally of 63 cents per share.

Following the release of disappointing third-quarter results, shares of AGNC Investment declined 4.2% to $20.53 during regular trading session on Oct 26.

However, encouragingly, the third-quarter comprehensive income per common share came in at 99 cents, way ahead of 40 cents recorded in the prior quarter.

Further, as of Sep 30, 2017, the company’s tangible net book value per share was $19.78, up from $19.25 as of Jun 30, 2017.

The economic return on tangible common equity for the company during the reported quarter was 5.6%. This included dividend per share of 54 cents and a rise of 53 cents in tangible net book value per share.

However, net interest income (NII) of $178 million came in lower than the prior-quarter figure of $181 million.

Inside the Headlines

As of Sep 30, 2017, the company’s investment portfolio aggregated $72.5 billion. This included $71.7 billion of Agency mortgage backed securities (MBS) and to-be-announced (TBA) securities, and $0.8 billion of credit risk transfer (CRT) and non-agency securities.

Inclusive of its net TBA position and net payable/(receivable) for unsettled securities, AGNC Investment’s tangible net book value "at risk" leverage ratio was 8.0x as of Sep 30, 2017, against 8.1x as of Jun 30, 2017.

For the third quarter, the company's investment portfolio bore a weighted average constant repayment rate (CPR) of 12.1%, up from 10.9% in the prior quarter.

Excluding net TBA position, AGNC Investment's average asset yield was 2.72% for the reported quarter, up from 2.66% recorded in the previous quarter.

Average cost of funds, excluding the net TBA position, was 1.59% in third-quarter 2017, marking an increase from 1.51% witnessed in the prior quarter. The rise primarily stemmed from higher repo rates which were mostly offset by an uptick in the average floating rate received on AGNC Investment’s interest rate swaps.

On its balance sheet and dollar roll funded assets, combined annualized net interest rate spread for the quarter came in at 1.34%, down from 1.46% reported in the prior quarter.

Also, as of Sep 30, 2017, AGNC Investment’s cash and cash equivalents totaled around $1.10 billion, down from $1.12 billion as of Jun 30, 2017.

Dividend Update

In the third quarter, AGNC Investment announced monthly dividends of 18 cents per share for July, August and September. Notably, the company had announced a total of $7.3 billion in common stock dividends or $36.62 per common share, since its initial public offering in May 2008 through third-quarter 2017.

AGNC Investment currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

We now look forward to the earnings releases of Annaly Capital Management, Inc. NLY, Vornado Realty Trust VNO and HCP, Inc. HCP which are expected next week.

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AGNC Investment Corp. (AGNC): Free Stock Analysis Report
 
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