The second-quarter earnings is now in full swing with several companies from the broader finance sector having reported their results already. Real estate investment trusts (“REIT”) space, which is an important part of the finance sector, is no exception to this. Several mortgage REITs (“mREIT”) have also come out with the April–June quarter results.
One major mREIT which reported second-quarter 2016 results on Jul 27 is American Capital Agency Corp. AGNC. American Capital Agency reported second-quarter 2016 net spread and dollar roll income of 56 cents per share (excluding estimated "catch-up" premium amortization benefit) that beat the Zacks Consensus Estimate of 51 cents. The reported figure also came higher than 52 cents earned in the prior quarter.
Some mREITs which are slated to report June quarter-end results on Aug 1 are, American Capital Mortgage Investment Corp. MTGE, Anworth Mortgage Asset Corporation ANH, Great Ajax Corp AJX and Resource Capital Corp. RSO.
mREITs borrow money at a very low rate of interest, and in turn use it to purchase MBSs. So, a low interest rate environment serves as a boon for the mREIT industry. During the first half of the second quarter, the chances of a rate hike kept the mREIT industry on tenterhooks. However, following the dismal jobs report in early June, chances of a hike were diminished substantially. This somewhat allayed the concerns of this industry.
Now let’s take a look at what’s in store for these mREITs which are slated to report on Aug 1.
For doing this, we rely on the Zacks methodology, combining a favorable Zacks Rank – Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) – and a positive Earnings ESP, to predict the chances of a beat this quarter.
Our proprietary methodology, Earnings ESP, shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Research shows that with this combination of rank and ESP, chances of a positive earnings surprise are as high as 70% for the stocks.
Bethesda, MD-based American Capital Mortgage Investment invests primarily in agency and non-agency mortgage investments and other mortgage-related investments. The company has an Earnings ESP of -4.88% and a Zacks Rank #4 (Sell). The company lacks in both the requirements and our model does not predict an earnings beat.
AMER CAP MTGE Price and EPS Surprise
AMER CAP MTGE Price and EPS Surprise | AMER CAP MTGE Quote
Anworth Mortgage Asset Corporation is a Santa Monica, CA-based mREIT which invests in mortgage pass-through certificates, collateralized mortgage obligations, mortgage loans and other securities. The company has an Earnings ESP of 0.00% and a Zacks Rank #3. Our model does not conclusively predict that the company will record a positive surprise.