Why Is Annaly (NLY) Up 5.9% Since Last Earnings Report?

It has been about a month since the last earnings report for Annaly Capital Management (NLY). Shares have added about 5.9% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Annaly due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Annaly Capital Management Inc before we dive into how investors and analysts have reacted as of late.

Annaly Q2 Earnings Beat Estimates, Net Interest Income Improves Y/Y

Annaly reported second-quarter 2026 earnings available for distribution (EAD) per average share of 79 cents, which beat the Zacks Consensus Estimate of 75 cents. The figure increased from 73 cents in the year-ago quarter.

NII and net interest margin improved year over year in the reported quarter. Notably, the year-over-year increase in book value per common share (BVPS) was also encouraging. However, higher economic funding costs were concerning.

Net income available to common stockholders was $781.6 million compared with $19.8 million in the year-ago period.

Inside Annaly’s Q2 Headlines

NII was $488.2 million in the reported quarter, which lagged the Zacks Consensus Estimate by 4.1%. In the prior-year quarter, the company reported NII of $273.2 million.

Net interest spread (excluding PAA) of 1.50% in the second quarter increased from 1.47% in the prior-year quarter.

Annaly’s BVPS was $20.15 as of June 30, 2026, up from $18.45 in the prior-year quarter. At the end of the reported quarter, the company’s economic capital ratio was 14.9%, up from 14.3% in the prior-year quarter.

In the second quarter, the weighted average actual constant prepayment rate was 11.6%, up from 8.7% in the year-ago quarter.

Annaly generated an annualized EAD return on average equity of 15.12% in the second quarter, which increased from the prior-year quarter’s 14.86%.

The company’s total portfolio was $109.4 billion in the quarter, including a $95 billion Agency portfolio. The Residential Credit portfolio was $10.4 billion, while the MSR portfolio was $4.1 billion.

NLY Keeps Leverage Conservative With Ample Liquidity

Annaly maintained a disciplined leverage profile in the quarter, with GAAP leverage at 7.4X, up from 7.3X in the prior quarter, and economic leverage at 5.6X, down from 5.7X. The company also reported total stockholders’ equity of $16.9 billion as of the quarter-end.

Liquidity remained a focal point, given ongoing macro and rate uncertainty. Annaly ended the quarter with $9.6 billion in total assets available for financing, including $5.5 billion in cash and unencumbered Agency MBS. The company also increased financing capacity in its Residential Credit business by $740 million through expanded credit facilities.

Annaly Hedging Rises Amid Macro Uncertainty

Against an uncertain rate environment, NLY adopted a more defensive hedge posture. The company ended the quarter with a hedge ratio of 97%, up from 87% in the prior quarter, while its hedge portfolio increased to $92 billion from $81 billion.

Funding costs were mixed during the quarter. Average GAAP costs of interest-bearing liabilities declined one basis point sequentially to 4.28%, while average economic costs increased three basis points to 3.96%. The net interest margin, excluding PAA, was 1.76% compared with 1.71% in the second quarter of 2025. Average yield on interest-earning assets, excluding the premium amortization adjustment, was 5.46%, up from 5.41% in the year-ago quarter.

NLY Leans on Dividend Coverage & Capital Raising

A key highlight for income-focused investors was that earnings again exceeded the common dividend. Annaly increased its quarterly common stock cash dividend to 75 cents per share for the second quarter from 70 cents in the year-ago period, supported by its earnings available for distribution.

The company also leaned on equity issuance to support growth. Annaly raised $447 million through its at-the-market sales program during the quarter, which it characterized as accretive, and largely deployed the capital into higher-coupon TBA securities and specified pools.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in fresh estimates.

VGM Scores

At this time, Annaly has a poor Growth Score of F, a score with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Annaly has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Annaly is part of the Zacks REIT and Equity Trust industry. Over the past month, AGNC Investment (AGNC), a stock from the same industry, has gained 3.4%. The company reported its results for the quarter ended June 2026 more than a month ago.

AGNC Investment reported revenues of $305 million in the last reported quarter, representing a year-over-year change of +88.3%. EPS of $0.40 for the same period compares with $0.38 a year ago.

AGNC Investment is expected to post earnings of $0.39 per share for the current quarter, representing a year-over-year change of +11.4%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.2%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for AGNC Investment. Also, the stock has a VGM Score of D.

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This article originally published on Zacks Investment Research (zacks.com).

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