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NEW YORK ( TheStreet) -- American Capital Agency (Nasdaq: AGNC) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income and disappointing return on equity.

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Highlights from the ratings report include:
  • AMERICAN CAPITAL AGENCY CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, AMERICAN CAPITAL AGENCY CORP reported lower earnings of $3.17 versus $4.40 in the prior year. For the next year, the market is expecting a contraction of 45.7% in earnings ($1.72 versus $3.17).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 98.3% when compared to the same quarter one year ago, falling from $1,829.00 million to $32.00 million.
  • 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, AMERICAN CAPITAL AGENCY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for AMERICAN CAPITAL AGENCY CORP is currently very high, coming in at 91.15%. Regardless of AGNC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AGNC's net profit margin of 7.86% is significantly lower than the industry average.
  • The revenue fell significantly faster than the industry average of 10.0%. Since the same quarter one year prior, revenues fell by 27.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

American Capital Agency Corp. operates as a real estate investment trust (REIT). American Capital Agency has a market cap of $8.36 billion and is part of the financial sector and real estate industry. Shares are up 21.7% year to date as of the close of trading on Wednesday.

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

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