Analysts anticipate a modest decline in Annaly Capital Management’s (NLY) Q1 2024 earnings for distribution, scheduled for release after market close on Wednesday. Despite the anticipated downturn, optimism prevails due to the potential benefits of narrowing mortgage spreads for the mortgage REIT.
Annaly’s earnings per share (EPS) for distribution are estimated at $0.65, below the previous quarter’s $0.68 and the year-earlier period’s $0.81. However, the company has a history of exceeding Wall Street expectations, with 10 out of the past 12 quarterly earnings beating forecasts.
Rising mortgage rates and elevated inflation have led to revisions in Annaly’s Q1 2024 earnings estimates. While climbing mortgage rates may indicate slower prepayment speeds and increased servicing fees, they can also raise funding costs.
Analysts are cautious about the potential impact of a still-inverted Treasury yield curve and leverage risks. However, Annaly’s low risk to Treasury rates due to hedging through swaps provides some reassurance.