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AGNC Investment (AGNC)
NASDAQ:AGNC
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AGNC Investment
(NASDAQ:AGNC)
59Neutral
Positive Factors
Dividends
The dividend is expected to remain stable despite current market pressures.
Investment Outlook
AGNC noted that the investment outlook remains strong – returns on new investments are in the upper teens (17-18.5%), above AGNC’s break-even ROE of ~17%, suggesting near term dividend stability.
Yield and Valuation
AGNC shares are seen as attractive, with a 13.9% dividend yield covered by earnings.
Negative Factors
Comprehensive Loss
AGNC reported a comprehensive loss of ($0.11)/share due to interest rate volatility around the Presidential election, which was well below its $0.36/share dividend.
Earnings
Q4'24 core EPS of $0.37 was lower than consensus estimates of $0.42, largely due to lower interest rate swap income and higher share count.
Stock Valuation
The current stock price equates to 1.16x TBV, whereas the benchmark for mortgage REITs is regarded to be 1.0x TBV, which does not produce enough total return upside to justify a Buy rating.
AGNC Investment (AGNC) vs. S&P 500 (SPY)
Market Cap
$7.43B
Dividend Yield17.73%
Average Volume (3M)32.06M
Price to Earnings (P/E)8.7
Beta (1Y)1.02
Revenue Growth384.69%
EPS Growth963700.00%
CountryUS
Employees53
SectorReal Estate
Sector Strength70
IndustryREIT - Mortgage
Share Statistics
EPS (TTM)0.96
Shares Outstanding915,463,700
10 Day Avg. Volume46,906,030
30 Day Avg. Volume32,063,806
Financial Highlights & Ratios
PEG Ratio<0.00001
Price to Book (P/B)N/A
Price to Sales (P/S)9.41
Price to Cash Flow (P/CF)29.00
P/FCF Ratio29.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$10.19Price Target Upside22.04% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
AGNC Investment Business Overview & Revenue Model
Company DescriptionAGNC Investment Corp. is a real estate investment trust (REIT) that primarily invests in agency residential mortgage-backed securities (MBS) for which the principal and interest payments are guaranteed by a U.S. government agency or a U.S. government-sponsored enterprise. The company is headquartered in Bethesda, Maryland, and was founded in 2008. AGNC's investment strategy focuses on generating attractive risk-adjusted returns through a combination of asset selection, financing, and hedging techniques.
How the Company Makes MoneyAGNC Investment Corp. makes money primarily through the interest income generated from its portfolio of agency mortgage-backed securities. The company borrows funds at relatively low short-term interest rates and then invests these funds in higher-yielding long-term mortgage-backed securities. The difference between the interest earned on the assets and the interest paid on the borrowed funds is known as the net interest margin, which forms the core of AGNC's earnings. Additionally, AGNC employs hedging strategies to manage interest rate risk, which can impact the value of its investments and the cost of its borrowings. The company also engages in portfolio management activities, such as buying and selling securities, to optimize its returns. Significant factors contributing to AGNC's earnings include interest rate conditions, the shape of the yield curve, and the effectiveness of its hedging strategies.
AGNC Investment Financial Statement Overview
Summary
AGNC Investment exhibits a mixed financial profile with strengths in balance sheet stability but challenges in income generation. The lack of revenue in the latest year raises concerns about future operational performance, despite a positive net income. Cash flow management shows signs of stability, albeit with room for improvement. Investors should be cautious of the income volatility and focus on the company's ability to generate sustainable revenue and profit in the future.Income Statement
AGNC's income statement shows significant volatility in revenue and profitability. The company reported zero revenue in the latest year compared to previous periods, indicating potential instability. Despite a positive net income in 2024, the absence of gross profit and EBIT suggests operational inefficiencies. Historical revenue growth is inconsistent, and margins have been under pressure, particularly with negative EBIT in some years.45
Neutral
Balance Sheet
AGNC maintains a strong equity position with a debt-to-equity ratio of zero, indicating no long-term debt. The equity ratio is healthy, suggesting a stable financial foundation. Return on equity has fluctuated, reflecting inconsistent profitability. Overall, the balance sheet remains robust with low leverage and substantial stockholders' equity.70
Positive
Cash Flow
Cash flow analysis reveals mixed results. Operating cash flow improved in 2024, but free cash flow is limited due to high capital expenditures. The operating cash flow to net income ratio indicates some cash generation strength, though historical fluctuations in free cash flow growth present concerns. Cash flow management appears stable but not optimal.55
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 0.00 | 251.00M | 2.55B | 837.00M | -173.00M | Gross Profit |
| -74.00M | 251.00M | 2.48B | 749.00M | -439.00M | EBIT |
| -184.00M | 100.00M | -565.00M | 749.00M | -266.00M | EBITDA |
| -184.00M | 2.59B | 2.40B | 749.00M | 0.00 | Net Income Common Stockholders |
| 731.00M | 155.00M | -1.19B | 749.00M | -266.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 505.00M | 518.00M | 1.02B | 998.00M | 1.02B | Total Assets |
| 88.02B | 71.60B | 51.75B | 68.15B | 81.82B | Total Debt |
| 64.00M | 80.00M | 95.00M | 126.00M | 177.00M | Net Debt |
| -441.00M | -438.00M | -923.00M | -872.00M | -840.00M | Total Liabilities |
| 78.25B | 63.34B | 43.88B | 57.86B | 70.74B | Stockholders Equity |
| 9.76B | 8.26B | 7.87B | 10.29B | 11.08B |
| Cash Flow | Free Cash Flow | |||
| 86.00M | -118.00M | 1.01B | 1.54B | 1.75B | Operating Cash Flow |
| 86.00M | -118.00M | 1.01B | 1.54B | 1.75B | Investing Cash Flow |
| -11.17B | -14.67B | 11.19B | 3.84B | 36.52B | Financing Cash Flow |
| 11.08B | 14.23B | -11.39B | -6.17B | -37.23B |
AGNC Investment Technical Analysis
Negative
8.35
Price Trends
9.81
Negative
9.46
Negative
9.34
Negative
Market Momentum
-0.11
Positive
36.33
Neutral
11.94
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AGNC, the sentiment is Negative. The current price of 8.35 is below the 20-day moving average (MA) of 9.44, below the 50-day MA of 9.81, and below the 200-day MA of 9.34, indicating a bearish trend. The MACD of -0.11 indicates Positive momentum. The RSI at 36.33 is Neutral, neither overbought nor oversold. The STOCH value of 11.94 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AGNC.
AGNC Investment Risk Analysis
AGNC Investment disclosed 44 risk factors in its most recent earnings report. AGNC Investment reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
AGNC Investment Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $1.98B | 8.85 | 8.62% | 16.48% | -11.26% | -33.80% | |
70 Outperform | $5.94B | 15.99 | 5.55% | 10.91% | -0.97% | 3.75% | |
68 Neutral | $10.34B | 10.67 | 8.40% | 15.32% | 13.33% | ― | |
65 Neutral | $5.08B | 5.73 | 12.59% | 10.45% | 25.16% | 52.40% | |
61 Neutral | $4.21B | 15.62 | -3.65% | 12.27% | 6.29% | -21.37% | |
60 Neutral | $3.14B | ― | -5.01% | 11.67% | -12.86% | -182.05% | |
59 Neutral | $7.43B | 8.73 | 9.58% | 17.73% | 384.69% | 963700.00% |
* Real Estate Sector Average
Performance Comparison
AGNC
AGNC Investment
8.35
0.47
5.96%
NLY
Annaly Capital
17.50
1.76
11.18%
ABR
Arbor Realty
10.52
-0.22
-2.05%
BXMT
Blackstone Mortgage
17.53
1.17
7.15%
RITM
Rithm Capital
9.76
0.13
1.35%
STWD
Starwood Property
17.82
0.59
3.42%
AGNC Investment Earnings Call Summary
Earnings Call Date: Jan 27, 2025 | % Change Since: -11.55% | Next Earnings Date: Apr 21, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a positive full-year performance with a 13.2% economic return, successful capital raising, and a strong unencumbered asset position. However, the fourth quarter experienced challenges with a comprehensive loss and negative economic return due to interest rate volatility and wider spreads. The investment outlook remains favorable with balanced supply and demand for agency MBS and stable spreads.Highlights
Positive Full-Year Economic Return
AGNC generated a positive economic return of 13.2% in 2024, driven by their monthly dividend.
Successful Capital Raising
AGNC raised $511 million of common stock through the at-the-market offering program at a considerable premium, totaling $2 billion for the year.
Strong Unencumbered Asset Position
AGNC concluded the quarter with unencumbered cash and agency MBS of $6.1 billion or 66% of tangible equity.
Favorable Investment Outlook
The supply and demand outlook for agency MBS is balanced, with potential upside in demand and stable agency spreads expected to remain in their attractive trading range.
Lowlights
Fourth Quarter Comprehensive Loss
AGNC reported a comprehensive loss of $0.11 per common share for the fourth quarter.
Negative Economic Return for Q4
The economic return on tangible common equity was negative 0.6% for the quarter, due to higher interest rates and modestly wider spreads.
Interest Rate Volatility and Wider Spreads
Sharp increase in interest rates and modestly wider agency spreads drove a slightly negative economic return for the fourth quarter.
Company Guidance
In the AGNC Investment Corp. Fourth Quarter 2024 Shareholder Call, the company provided guidance indicating a positive economic return of 13.2% for the year, driven by a monthly dividend totaling $1.44 per common share, despite a slightly negative return of 0.6% in the fourth quarter due to higher interest rates and wider agency spreads. AGNC's portfolio witnessed additions of approximately $2 billion in agency MBS during the quarter, totaling $73.3 billion by year-end. Leverage remained steady at 7.2 times tangible equity, and unencumbered cash and agency MBS accounted for 66% of tangible equity. The CPR for the portfolio decreased to 7.7%, reflecting higher interest rates, while net spread and dollar roll income declined by $0.06 to $0.37 per share. The company anticipates a well-balanced supply and demand outlook for agency MBS in 2025, with the expectation that agency spreads will remain in an attractive trading range, supported by stable longer-term interest rates and potential increased bank demand.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.