Earnings Preview: American Capital Agency Corp. - Analyst Blog
21 April 2011 - 6:50PM
Zacks
American Capital Agency
Corp. (AGNC), a real estate investment
trust, is scheduled to report its fiscal 2011 first quarter
earnings after the closing bell on April 25, 2011.
The current Zacks Consensus
Estimate for the first quarter is $1.36 per share, representing
year-over-year growth of about 69.4%.
Fourth Quarter
Recap
American Capital reported earnings
of $2.50 per share during the fourth quarter 2010, compared to
$1.79 in the year-earlier quarter. Excluding one-time items,
recurring net income for the reported quarter was $1.26 per
share.
For full year 2010, the company
reported net income of $7.89 per share, compared to $6.78 in the
previous year. Excluding one-time items,
recurring net income for fiscal 2010 was $4.50 per share.
The company generated total
revenues of $101.0 million during fourth quarter 2010 compared to
$41.1 million in the year-ago quarter. For full year 2010, American
Capital Agency reported total revenues of $253.1 million compared
to $127.9 million.
As of December 31, 2010, the
company's book value per share was $24.24, compared to $22.48 at
year-end 2009. At year-end 2010, American Capital Agency had cash
and cash equivalents of $173.3 million.
Agreement of
Analysts
In the last 7 days, no analysts
have revised their earnings estimate for the first
quarter or for fiscal 2011. In the last 30 days, four out of 15
analysts covering the stock have increased their earnings estimates
for the first quarter and two out of the 15 have increased for
fiscal 2011. Meanwhile in the last 30 days, one out of the 15
analysts covering the stock revised lower for the first quarter and
three out of the 15 have slashed fiscal 2011
estimates.
Magnitude of Estimate
Revisions
Taking into account the analysts’
earnings revision, the Zacks Consensus Estimates for the first quarter
and fiscal 2011 have remained constant over the last 7 days.
However, in the last 30 days the Zacks Consensus Estimate increased
by 3 cents to $1.36 per share for first quarter while
it decreased by three cents to $5.31per share for
fiscal 2011.
Our
Recommendation
American Capital invests only in
fixed-rate agency securities where payments are guaranteed by the
U.S. government or government-owned entities, such as
Fannie Mae (FNMA), Freddie Mac
(FMCC) and Ginnie Mae (GNMA). Specifically,
American Capital invests in FMCC Gold certificates, FNMA
certificates, and GNMA certificates. American Capital Agency's
securities now have an explicit government guarantee, which makes
agency REITs a much more attractive prospect for investors.
However, the residential mortgage
market in the U.S. has experienced defaults, credit losses and
liquidity concerns in the recent past, which have reduced financial
industry capital, leading to reduced liquidity for some
institutions. These factors have impacted investor perception of
the risk associated with real estate related assets, including
agency securities and other high-quality RMBS (residential mortgage
backed securities) assets.
As a result, values for RMBS
assets, including some agency securities and other AAA-rated RMBS
assets, have experienced a certain amount of volatility. Increased
volatility and deterioration in the broader residential mortgage
and RMBS markets may adversely affect the performance of American
Capital in the future.
We currently have a ‘Neutral’
recommendation on American Capital, which presently has a Zacks #3
Rank ('Hold') One of its competitors, MFA Financial,
Inc. (MFA) also retains a Zacks #3 Rank right now.
AMER CAP AGENCY (AGNC): Free Stock Analysis Report
FREDDIE MAC (FMCC): Free Stock Analysis Report
FANNIE MAE (FNMA): Free Stock Analysis Report
MFA FINANCIAL (MFA): Free Stock Analysis Report
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