Why Annaly Capital Management (NLY) Stock Is Down Today

NEW YORK (TheStreet) -- Annaly Capital Management  (NLY) fell Thursday after the mortgage real estate investment trust reported first-quarter earnings that missed analysts' expectations.

The company reported core earnings of 23 cents a share, which was short of the Zacks Consensus Estimate of 27 cents. It also represented a sequential decline from 35 cents a share and a year-over-year decline from 29 cents a share. Net interest income declined 5.1% year over year and 16.2% sequentially to $530.9 million.

The stock was down 3.55% to $11.42 at 10:34 a.m.

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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 exceeded that of the S&P 500 and greatly outperformed compared to the Real Estate Investment Trusts (REITs) industry average. 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 26.35%, 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

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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