Annaly Beats Q2 Earnings Estimates as Net Interest Income Rises Y/Y

Annaly Capital Management, Inc. NLY second-quarter 2025 adjusted earnings available for distribution (EAD) per average share of 73 cents topped the Zacks Consensus Estimate by 1.4%. The figure increased 7.4% from the year-ago quarter. The results were primarily aided by a significant rise in net interest income (NII).

The Federal Reserve lowered the interest rates by 100 basis points in 2024 and has kept rates steady since then. As a result, mortgage rates are experiencing a slight decline. Housing affordability challenges are declining with relatively lower mortgage rates.

With rates trending lower and balanced supply/affordability playing out in the mortgage market, loan demand is witnessing an increase. This aided NLY’s NII in the second quarter of 2025. NII was $273.2 million in the reported quarter compared with $53.6 million in the prior-year quarter.

With improving purchase originations and refinancing activities, NLY will likely witness book value improvement in the coming period as spreads in the Agency market tighten, driving asset prices. This should also boost net interest spread, improving the portfolio's overall yield. This is expected to support Annaly’s financials in the upcoming period.

How NLY Competes With AGNC & ABR in Terms of NII

AGNC Investment AGNC performance is also influenced by the mortgage rate trajectory. With relatively lower mortgage rates, AGNC Investment’s NII is witnessing a rise. Its second-quarter 2025 net interest income was $162 million against a net interest expense of $3 million in the prior-year quarter.

With relatively lower mortgage rates and improving purchase origination, AGNC Investment will likely witness a reduction in operational and financial challenges, and an increase in the gain on sale margin and investment activity in the upcoming period.

Despite relatively lower mortgage rates, Arbor Realty Trust’s ABR NII declined 21.9% year over year to $68.7 billion in the second quarter of 2025. However, with declining mortgage rates and relatively lower interest rates, Arbor Realty will likely witness an increase in net interest spreads. This will ease earnings pressure for the ABR as it is facing rising funding costs. Also, this will reduce operational and financial challenges for Arbor Realty, and increase the gain on sale margin and investment activity.

Annaly’s Price Performance, Valuations & Estimates

NLY shares have gained 22.3% in the past year compared with the industry’s growth of 8.1%.

Price Performance

From a valuation standpoint, Annaly trades at a forward price-to-tangible book (P/TB) ratio of 1.07X, above the industry’s average of 0.96X.

Price-to-Tangible Book TTM

The Zacks Consensus Estimate for NLY’s 2025 and 2026 earnings implies year-over-year rallies of 6.3% and 3.3%, respectively. The estimate for 2025 has been revised upward over the past seven days, while for 2026, it has been unchanged.

Earnings Estimates

Annaly currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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