Why Did Annaly Capital’s Stock Rise on Thursday?

October 27, 2022 at 18:08 PM EDT

Annaly Capital’s stock (NYSE:NLY) jumped 6.2% following the opening bell at 9:48 a.m. on Thursday. ET. By 1:15 p.m. ET, it was still up roughly 4.8% for the day. Year to date, the stock is down approximately 40%.

The Dow Jones Industrial Average was up more than 400 points at roughly 1:15 p.m. on Thursday morning. ET. The S&P 500 was marginally up, while the Nasdaq was down in the early afternoon.

So, What’s the Deal With Annaly Capital’s Stock?

After the market closed on Wednesday, Annaly Capital Management (NYSE:NLY), a mortgage real estate investment trust (REIT), reported good third-quarter profits, sending Annaly stock (NYSE:NLY) price soaring.

Annaly Capital exceeded sales and profit expectations for the quarter. Earnings available for distribution (EAD), a typical metric for REITs that excludes nonrecurring factors, were $1.06 per share for the REIT. It outperformed expectations of $1.03 per share but was down from $1.12 a year earlier. This is the sixth quarter in a row that it has exceeded year-over-year expectations.

In addition, the corporation reported a net interest income of $278 million, a decrease from $362 million the previous year. It fell short of expectations.

Given the challenging housing market, CEO David Finkelstein and investors were happy.

“Our strong capital base, disciplined portfolio and risk management, and deep financing sources have enabled us to weather this persistent volatility and prepare us for further sustained macroeconomic uncertainty,” Finkelstein said in the earnings release. “While we expect to maintain our defensive positioning due to the difficult operating environment, we continue to view asset valuations as attractive and are poised to take advantage of opportunities when technical fact dictates.”

So, What Now?

Annaly reported overall assets of $86 billion, an increase from $82 billion the previous quarter, with agency assets up 4.5% to $78 billion. In addition, its mortgage servicing rights platform increased by 9% to $1.9 billion.

On Thursday, Mark DeVries, an analyst at Barclays (BCS 0.36%), upgraded Annaly stock (NYSE:NLY) to overweight, raising the price objective to $19 per share, which is just a few cents more than its current value.

While the market might be tough for Annaly in the next few quarters due to increasing interest rates and the status of the housing industry, it remains a great income stock. It maintained a quarterly dividend of $0.88 per share in the third quarter, yielding 20.5%, up from 14.9% in the previous quarter and 10.5% in the third quarter of 2021.

Featured Image- Unsplash @ webaliser

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