NEW YORK (TheStreet) -- Annaly Capital Management (NLY) experienced a steep drop at 2 p.m. EDT and closed down 2.28%at $11.15 on Wednesday. The drop came after Trade Ideas LLC released a note that described the real estate investment trust as "water-logged and getting wetter".
Stocks fell across the board this afternoon after new Fed chairwoman Janet Yellen announced that the Fed's stiumulus package would be ending in the fall and that interest rates could go up as early as next year, which does not bode well for the borrowing costs of REITs like Annaly.
Separately, TheStreet Ratings team rates Annaly CAPITAL MANAGEMENT as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ANNALY CAPITAL MANAGEMENT (NLY) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 46.9% when compared to the same quarter one year prior, rising from $700.50 million to $1,028.75 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, ANNALY CAPITAL MANAGEMENT's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for ANNALY CAPITAL MANAGEMENT is currently very high, coming in at 93.44%. 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 119.86% significantly outperformed against the industry.
- NLY's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 26.32%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- Net operating cash flow has significantly decreased to -$6,000.48 million or 1800.99% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: NLY Ratings Report