Annaly Capital Management (NLY) Roof Leaking Today

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 "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) 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 $52.3 million.
  • NLY has traded 7.5 million shares today.
  • NLY is trading at 1.99 times the normal volume for the stock at this time of day.
  • NLY crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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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 10.3%. NLY has a PE ratio of 14.5. 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 7.4 million shares per day over the past 30 days. Annaly Capital Management has a market cap of $11.0 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.27 and a short float of 2.1% with 4.32 days to cover. Shares are up 16.6% year-to-date as of the close of trading on Wednesday.

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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 solid stock price performance, increase in net income and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • 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 84.4% when compared to the same quarter one year prior, rising from $192.46 million to $354.86 million.
  • NLY, with its decline in revenue, underperformed when compared the industry average of 13.9%. Since the same quarter one year prior, revenues slightly dropped by 2.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 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.
  • Net operating cash flow has significantly decreased to -$1,078.33 million or 232.98% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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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