Today's Water-Logged And Getting Wetter Stock: Annaly Capital Management (NLY)

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.

Trade-Ideas LLC identified Annaly Capital Management ( NLY) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Annaly Capital Management as such a stock due to the following factors:

  • NLY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $99.3 million.
  • NLY has traded 2.6 million shares today.
  • NLY traded in a range 218.5% of the normal price range with a price range of $0.32.
  • NLY traded below its daily resistance level (quality: 174 days, meaning that the stock is crossing a resistance level set by the last 174 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on NLY:

Annaly Capital Management, Inc. owns a portfolio of real estate related investments in the United States. The stock currently has a dividend yield of 10.7%. NLY has a PE ratio of 18.1. Currently there are 2 analysts that rate Annaly Capital Management a buy, 2 analysts rate it a sell, and 7 rate it a hold.

The average volume for Annaly Capital Management has been 7.1 million shares per day over the past 30 days. Annaly Capital Management has a market cap of $10.7 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.25 and a short float of 2.2% with 2.28 days to cover. Shares are up 13.3% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Annaly Capital Management as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 141.26% to $1,576.85 million when compared to the same quarter last year. In addition, ANNALY CAPITAL MANAGEMENT has also vastly surpassed the industry average cash flow growth rate of 18.92%.
  • The gross profit margin for ANNALY CAPITAL MANAGEMENT is currently very high, coming in at 92.07%. 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 -50.97% significantly underperformed when compared to the industry average.
  • 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 120.5% when compared to the same quarter one year ago, falling from $1,638.21 million to -$335.51 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, ANNALY CAPITAL MANAGEMENT's return on equity is below that of both the industry average and the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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