2024-04-27 09:49:59 ET
Summary
- Annaly reported mixed Q1 earnings, showing book value growth, but missing on earnings available for distribution.
- Annaly experienced some share price weakness following higher than expected inflation in early April, causing shares to be priced below the longer term P/B average ratio.
- The dividend remained covered on an LTM-basis and I see no reason for a dividend cut in FY 2024.
- Annaly's improving spread profile, Q/Q book value gain and discount valuation improve the risk profile for investors.
Annaly ( NLY ) reported mixed first quarter earnings on Wednesday that showed an improving spread picture as well as as another quarter of book value growth, but the mortgage REIT also slightly missed earnings expectations. Recently, Annaly has seen some share price weakness which followed the revelation of higher than expected inflation numbers in March… which suggests that the Federal Reserve will want to take it easy with federal fund rate cuts in 2024. However, shares of Annaly are priced at a discount to book value (as well as below the 3-year average P/B ratio) and dividend investors can take advantage of recent share price weakness. The strength of Annaly’s first-quarter earnings sheet, especially the improving net interest spread, also supports my change in the stock rating to buy!...
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Annaly: Improved Value Proposition (Rating Upgrade)