NEW YORK (
) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and disappointing return on equity.
Highlights from the ratings report include:
- The debt-to-equity ratio is very high at 7.03 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, AMERICAN CAPITAL AGENCY CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- AMERICAN CAPITAL AGENCY CORP has improved earnings per share by 10.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, AMERICAN CAPITAL AGENCY CORP increased its bottom line by earning $7.55 versus $6.72 in the prior year. For the next year, the market is expecting a contraction of 24.9% in earnings ($5.67 versus $7.55).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 382.4% when compared to the same quarter one year prior, rising from $36.86 million to $177.82 million.
- AGNC's very impressive revenue growth greatly exceeded the industry average of 10.5%. Since the same quarter one year prior, revenues leaped by 347.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
American Capital Agency Corp. (AGNC) operates as a real estate investment trust (REIT). It invests in agency pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by a U.S. Government agency or a U.S. The company has a P/E ratio of four, equal to the average real estate industry P/E ratio and below the S&P 500 P/E ratio of 17.7. American Capital Agency has a market cap of $3.7 billion and is part of the
industry. Shares are up 0.8% year to date as of the close of trading on Wednesday.
You can view the full
or get investment ideas from our