Abstract
Annaly Capital Management will report fourth-quarter results on January 28, 2026 Post Market, with consensus pointing to higher revenue and earnings, while investors weigh portfolio yields, funding costs, and mortgage spread dynamics.
Market Forecast
For the current quarter, Annaly Capital Management’s revenue is estimated at USD 1.47 billion, implying year-over-year growth of 16.68%, while forecast EBIT is USD 552.08 million with an expected year-over-year increase of 48.34% and estimated adjusted EPS of USD 0.73 with 9.56% year-over-year growth. Forecast commentary suggests a supportive gross profit margin structure typical of an agency mortgage REIT and a stable-to-improving net profit margin aligned with expected spread capture; if reported, adjusted EPS YoY growth is projected at 9.56%. The Agency portfolio remains the core revenue driver, with revenue resilience underpinned by securities yield and active portfolio positioning. The most promising segment appears to be Agency, contributing USD 495.45 million last quarter; growth prospects hinge on mortgage basis normalization and hedging efficiency, though explicit YoY for the segment was not disclosed.
Last Quarter Review
Annaly Capital Management’s last reported quarter showed revenue of USD 2.16 billion, a gross profit margin of 98.33%, GAAP net profit attributable to the parent company of USD 0.83 billion, a net profit margin of 92.10%, and adjusted EPS of USD 0.73, with adjusted EPS rising 10.61% year over year. A notable highlight was a sharp sequential rebound in net profit, with quarter-on-quarter growth of 1,357.90%, reflecting improved portfolio performance and spread capture. Main business performance was led by the Agency segment at USD 495.45 million in revenue, while Residential Credit contributed USD 94.34 million; Mortgage Servicing Rights posted a negative USD 45.91 million, and Company & Other added USD 1.70 million; segment-specific YoY data was not provided.
Current Quarter Outlook
Main Business: Agency Portfolio
The Agency portfolio is the central engine for Annaly Capital Management’s income generation, and this quarter’s outlook hinges on reinvestment yields and the mortgage basis. The forecast indicates a solid top-line trajectory, which suggests stable asset yields and balanced hedging against interest-rate volatility. Management’s ability to fine-tune duration positioning and convexity protection should be critical to preserving the gross margin near structurally high levels, even as funding costs fluctuate. If mortgage spreads tighten modestly, book value sensitivity improves, and incremental carry can support an EPS profile consistent with the USD 0.73 estimate; conversely, wider spreads could pressure book value but may create attractive reinvestment opportunities that reinforce revenue durability.
Largest Growth Potential: Agency Reinvestment and Turnover
The most visible growth lever is turnover within the Agency book as securities roll off and proceeds are redeployed at improved coupons. Last quarter’s USD 495.45 million Agency revenue base provides a reference point for potential expansion if rate stability sustains investor demand and supports tighter bid-ask conditions. Strategically, optimizing hedge ratios against funding costs can lift net margin capture even without substantial balance sheet growth. In the scenario where rate volatility moderates and prepayment speeds remain manageable, the revenue mix could continue to favor Agency assets with more predictable cash flows, bolstering the EBIT growth trajectory toward the 48.34% forecast increase.
Stock Price Drivers: Earnings Quality, Spread Dynamics, and Funding Costs
Three factors will steer near-term price reaction: earnings quality, realized spreads, and funding costs. Earnings quality relates to how much of the reported performance depends on sustainable net interest income versus transient valuation marks; the market will parse the composition in the bridge from revenue to EBIT and EPS. Spread dynamics—particularly the mortgage basis relative to hedging instruments—can alter both book value marks and prospective net interest income, shaping sentiment around the dividend capacity and stability. Funding costs, including repo and swap-linked expenses, are crucial as they determine the persistence of net profit margins; cost discipline and agile hedge management will influence whether the 92.10% net margin seen last quarter is maintainable, even if it moderates as balance sheet mix evolves.
Analyst Opinions
Recent institutional commentary leans constructive. A notable view is from J.P. Morgan, where analyst Richard Shane reaffirmed a Buy rating with a USD 22.00 price target, reflecting confidence in the outlook for earnings progression under current market conditions. The balance of opinions gathered in the period shows a predominance of positive stances, focusing on resilient spread income, stable Agency positioning, and improving earnings cadence into the fourth quarter. Analysts highlighting the supportive setup point to the revenue estimate of USD 1.47 billion and EPS estimate of USD 0.73 as reasonable anchors, with upside contingent on continued spread normalization and disciplined hedge execution. The majority bullish camp expects Annaly Capital Management to demonstrate credible earnings quality, maintain a high gross margin characteristic of its asset mix, and deliver a year-over-year uplift consistent with the current-quarter forecasts.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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