AGNC Investments (AGNC) Up 5.4% Since Last Earnings Report: Can This Continue?

A month has passed since the last earnings report of AGNC Investment (AGNC). Shares have risen about 5.4% in that time, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is AGNC Investment headed for a decline? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to better understand the important catalysts.

AGNC Investment’s first-quarter earnings beat the result thanks to higher asset yields

AGNC Investment’s first-quarter 2024 net spread and rollover earnings per common share (excluding estimated catch-up premium amortization benefit) of 58 cents beat the Zacks Consensus Estimate of 56 cents. However, the bottom line was down from the 60 cents recorded in the previous quarter.

Adjusted net interest income and roll income of $496 million decreased from $497 million in the prior-year quarter.

The company reported first-quarter total earnings per common share of 48 cents, compared with $1 in the prior-year quarter.

Inside the headlines

Net interest expense was $30 million, compared to $26 million in the prior quarter. The Zacks Consensus Estimate is pegged at $386 million.

The average return on assets from the AGNC Investment portfolio was 4.56% in the first quarter, compared to 4.47% recorded in the previous quarter.

The total weighted average cost of funds, including interest rate swaps, was 1.58% compared to 1.39% in the previous quarter.

Average net interest margin (excluding estimated catch-up premium amortization) was 2.98%, compared to 3.08% in the prior quarter.

As of March 31, 2024, the average net tangible book value of AGNC Investment’s risk-bearing leverage ratio was 7X compared to 7.4X in the prior quarter.

During the first quarter, the company’s investment portfolio had an average de facto fixed prepayment rate of 5.7%, compared to 6.2% in the previous quarter.

As of March 31, 2024, net tangible book value per common share (BVPS) was $8.84, compared to $8.70 as of December 31, 2023.

The economic rate of return on tangible equity capital was 5.7%. In the previous quarter, this rate was 12.1%. This included a dividend per share of 36 cents and an increase in net measurable BVPS of 14 cents.

As of March 31, 2024, the company’s investment portfolio was $63.3 billion. This included $53.7 billion of Agency MBS, $8.4 million of net forward purchases of Agency MBS in a to-be-announced market, and $1.1 billion of non-Agency credit risk transfers and securities and other mortgage investments.

As of March 31, 2024, AGNC Investment’s cash and cash equivalents were $505 million, compared to $518 billion as of December 31, 2023.

Dividend update

During the first quarter, AGNC Investment announced a dividend of 12 cents per share for January, February and March. Notably, management has declared a dividend of $13.1 billion on common shares, or $47.56 per common share, from the May 2008 IPO through the first quarter of 2024.

How have estimates changed since then?

It turns out that estimate revisions have been on a downward trend over the past month.

VGM results

Right now, AGNC Investment has a Weak Growth Score of F, which means the same Momentum Score. Plotting a somewhat similar path, the stock received a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the company’s overall VGM score is F. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company generally show a downward trend, and the scale of this correction indicates a downward shift. Notably, AGNC Investment has a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

Want the latest recommendations from Zacks Investment Research? Today you can download the top 7 stocks for the next 30 days. Click to get this free report

AGNC Investment Corp. (AGNC): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research