Barbarian At The Gate: 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.

Trade-Ideas LLC identified Annaly Capital Management ( NLY) as a "barbarian at the gate" (strong stocks crossing above resistance 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 $88.2 million.
  • NLY has traded 4.6 million shares today.
  • NLY traded in a range 331.1% of the normal price range with a price range of $0.28.
  • NLY traded above its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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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 11.9%. Currently there is 1 analyst that rates Annaly Capital Management a buy, 3 analysts rate it a sell, and 8 rate it a hold.

The average volume for Annaly Capital Management has been 7.7 million shares per day over the past 30 days. Annaly Capital Management has a market cap of $9.5 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.30 and a short float of 2.2% with 2.25 days to cover. Shares are down 7.1% 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 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 122.15% to $1,329.48 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 -62.88%.
  • The gross profit margin for ANNALY CAPITAL MANAGEMENT is currently very high, coming in at 90.45%. 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 -107.46% 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 164.0% when compared to the same quarter one year ago, falling from $1,028.75 million to -$658.08 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, ANNALY CAPITAL MANAGEMENT's return on equity significantly trails that of both the industry average and the S&P 500.

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