Annaly Capital Management Inc. Stock Hold Recommendation Reiterated (NLY)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- Annaly Capital Management (NYSE:NLY) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+ . The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

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Highlights from the ratings report include:

• NLY's revenue growth trails the industry average of 16.9%. Since the same quarter one year prior, revenues slightly increased by 1.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
• The gross profit margin for ANNALY CAPITAL MANAGEMENT is currently very high, coming in at 93.60%. Regardless of NLY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NLY's net profit margin of -9.00% significantly underperformed when compared to the industry average.
• Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, ANNALY CAPITAL MANAGEMENT underperformed against that of the industry average and is significantly less than that of the S&P 500.
• In its most recent trading session, NLY has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

Annaly Capital Management, Inc., a real estate investment trust, engages in the ownership, management, and financing of a portfolio of investment securities. Annaly Capital Management has a market cap of $15.53 billion and is part of the financial sector and real estate industry. The company has a P/E ratio of 106.2, above the S&P 500 P/E ratio of 17.7. Shares are down 0.2% year to date as of the close of trading on Monday.

You can view the full Annaly Capital Management Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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