Earnings results often indicate what direction a company will take in the months ahead. With Q1 behind us, let’s have a look at AGNC Investment (NASDAQ: AGNC) and its peers.
Thrifts & Mortgage Finance institutions operate by accepting deposits and extending loans primarily for residential mortgages, earning revenue through interest rate spreads (difference between lending rates and borrowing costs) and origination fees. The industry benefits from demographic tailwinds as millennials enter prime homebuying age, technological advancements streamlining the loan approval process, and potential interest rate stabilization improving affordability. However, significant headwinds include net interest margin compression during rate volatility, increased competition from fintech disruptors offering digital-first experiences, mounting regulatory compliance costs, and potential housing market corrections that could impact loan portfolios and default rates.
The 22 thrifts & mortgage finance stocks we track reported a slower Q1. As a group, revenues missed analysts’ consensus estimates by 18.5%.
In light of this news, share prices of the companies have held steady as they are up 1.9% on average since the latest earnings results.
AGNC Investment (NASDAQ: AGNC)
Born during the 2008 financial crisis when mortgage markets were in turmoil, AGNC Investment (NASDAQ: AGNC) is a real estate investment trust that primarily invests in mortgage-backed securities guaranteed by U.S. government agencies or enterprises.
AGNC Investment reported revenues of $78 million, down 83.3% year on year. This print fell short of analysts’ expectations by 73.6%. Overall, it was a slower quarter for the company with a slight miss of analysts’ tangible book value per share estimates.
"AGNC's 2.4% economic return on tangible common equity in the first quarter was comprised of $0.36 of dividends per common share and a modest $(0.16) decline in tangible net book value per common share resulting from the moderate increase in mortgage spreads to benchmark rates quarter-over-quarter," said Bernice Bell, the Company's Executive Vice President and Chief Financial Officer.
Interestingly, the stock is up 14.1% since reporting and currently trades at $9.33.
Read our full report on AGNC Investment here, it’s free.
Best Q1: Northwest Bancshares (NASDAQ: NWBI)
Founded in 1896 and operating across Pennsylvania, New York, Ohio, and Indiana, Northwest Bancshares (NASDAQ: NWBI) is a bank holding company that operates Northwest Bank, providing personal and business banking, investment management, and trust services.
Northwest Bancshares reported revenues of $156.2 million, up 19% year on year, outperforming analysts’ expectations by 9.9%. The business had a stunning quarter with a solid beat of analysts’ EPS and net interest income estimates.
The market seems content with the results as the stock is up 5% since reporting. It currently trades at $12.40.
Is now the time to buy Northwest Bancshares? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Dynex Capital (NYSE: DX)
Operating in the financial markets since 1988 with a focus on capital preservation during economic turbulence, Dynex Capital (NYSE: DX) is a mortgage real estate investment trust that invests primarily in government-backed residential mortgage securities to generate income for shareholders.
Dynex Capital reported revenues of $17.13 million, up 637% year on year, falling short of analysts’ expectations by 22.4%. It was a disappointing quarter as it posted a significant miss of analysts’ EPS estimates.
As expected, the stock is down 2.8% since the results and currently trades at $12.12.
Read our full analysis of Dynex Capital’s results here.
Walker & Dunlop (NYSE: WD)
Originating as a small mortgage banking firm during the Great Depression in 1937, Walker & Dunlop (NYSE: WD) provides commercial real estate financing, property sales, appraisal, and investment management services with a focus on multifamily properties.
Walker & Dunlop reported revenues of $237.4 million, up 4.1% year on year. This result lagged analysts' expectations by 1.8%. Zooming out, it was a mixed quarter as it also recorded a solid beat of analysts’ EPS estimates but a miss of analysts’ tangible book value per share estimates.
The stock is down 5.2% since reporting and currently trades at $70.01.
Read our full, actionable report on Walker & Dunlop here, it’s free.
Columbia Financial (NASDAQ: CLBK)
Founded during the Roaring Twenties in 1926 and headquartered in Fair Lawn, New Jersey, Columbia Financial (NASDAQ: CLBK) operates federally chartered savings banks in New Jersey that offer traditional banking services including loans, deposits, and insurance products.
Columbia Financial reported revenues of $55.86 million, up 25.9% year on year. This print topped analysts’ expectations by 11.8%. Taking a step back, it was a satisfactory quarter as it also logged a narrow beat of analysts’ tangible book value per share estimates but a slight miss of analysts’ EPS estimates.
The stock is up 7.1% since reporting and currently trades at $14.42.
Read our full, actionable report on Columbia Financial here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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