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1. Company Snapshot

1.a. Company Description

AGNC Investment Corp.operates as a real estate investment trust (REIT) in the United States.The company invests in residential mortgage pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by the United States government-sponsored enterprise or by the United States government agency.


It funds its investments primarily through collateralized borrowings structured as repurchase agreements.The company has elected to be taxed as a REIT under the Internal Revenue Code of 1986 and would not be subject to federal corporate income taxes, if it distributes at least 90% of its taxable income to its stockholders.The company was formerly known as American Capital Agency Corp.


and changed its name to AGNC Investment Corp.in September 2016.AGNC Investment Corp.


was incorporated in 2008 and is headquartered in Bethesda, Maryland.

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1.b. Last Insights on AGNCN

AGNC Investment Corp.'s recent performance was driven by its Q4 2024 earnings release, which beat expectations. The company's earnings call highlighted its strong portfolio performance, with Director, President and Chief Executive Officer Peter Federico stating that AGNC's "investment portfolio performed well in the quarter, with solid credit quality and minimal losses." Additionally, the company's preferred shares offer high single-digit yields, making them attractive to investors. The recent weakness in interest rates, with rates declining to six-week lows, has also benefited AGNC, as it reduces the company's cost of funds and increases the attractiveness of its preferred shares. Furthermore, the rotation into high-yielding preferred shares, such as AGNCP, has been driven by recent outperformance and reduced Fed rate cut expectations.

1.c. Company Highlights

2. AGNC Investment Corp.'s Q2 2025 Earnings: A Mixed Bag

AGNC Investment Corp. reported a comprehensive loss of $0.13 per common share for Q2 2025, with a $0.44 decline in tangible net book value per share. The company's economic return on tangible common equity was negative 1%. The net spread and dollar roll income declined to $0.38 per common share, primarily due to the timing of deployment of new capital and moderately higher swap costs. This translated to an ROE of around 3.8%, which is relatively low compared to its historical average. The actual EPS came out at $0.38, relative to estimates at $0.4101.

Publication Date: Jul -24

📋 Highlights

Financial Performance

The company's net interest rate spread decreased 11 basis points to 201 basis points. The portfolio totaled $82 billion at quarter-end, with a weighted average coupon of 5.13%. AGNC's liquidity position remains strong, with $6.4 billion in cash and unencumbered Agency MBS, representing 65% of tangible equity. The company raised almost $800 million of common equity through its at-the-market offering program at a premium to tangible net book value and deployed slightly less than half of the proceeds.

Valuation and Dividend Yield

At current prices, AGNC trades at a P/B Ratio of 0.94, which suggests that the stock is fairly valued. The Dividend Yield is 15.02%, which is relatively attractive compared to other companies in the financial sector. The P/E Ratio is 25.81, which is slightly higher than its historical average. The EV/EBITDA ratio is 3.33, which suggests that the company has a relatively low valuation compared to its earnings.

Outlook and Guidance

The outlook for Agency mortgage-backed securities is favorable due to four key factors: manageable MBS supply, growing demand, stabilizing agency spreads, and a cautious approach to GSE reform. According to Peter Federico, "The company views the current environment as offering high teens to 20% returns, aligning with its net spread and dollar roll income, but with period-to-period volatility." The company's return profile is most favorable in environments with wide and stable mortgage spreads.

Risk and Challenges

The risk of sharply lower rates and rapid repayments is existential, but with the mortgage rate at 6.75%, only about 5% of the universe has a 50 basis point incentive. The average weighted coupon of the portfolio is 5.13%, which is 60 basis points out of the money. The company positioned its asset side to benefit from a steepening yield curve, with most hedges concentrated in the 7-12 year range.

Management's Commentary

Federico discussed the company's swap hedges, capital deployment, and asset positioning. The company's swap hedges are rolling off, with $5 billion rolling off in Q2 and $2.3 billion replaced. This will lead to higher swap costs over time. The company deployed 50% of the accretive capital raised, with $1 billion invested in mortgages earlier that month. They favor upper coupons, particularly in specified pools with higher coupons (5-6% range) and prepayment protection.

3. NewsRoom

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Doves Take The Wheel

Nov -30

Source: seekingalpha.com

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A Fed Divided

Nov -23

Source: seekingalpha.com

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Rose's Income Garden Portfolio: 8 High-Yield Preferred Investments

Nov -19

Source: seekingalpha.com

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Hawks In The House

Nov -16

Source: seekingalpha.com

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When The Stimulus Stops

Nov -09

Source: seekingalpha.com

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Fed Cuts, Yields Jump, REITs Dip

Nov -02

Source: seekingalpha.com

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AGNC Investment Corp. (NASDAQ:AGNCN) Short Interest Up 165.4% in October

Oct -31

Source: defenseworld.net

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AGNC Investment Corp. (NASDAQ:AGNCN) Sees Large Increase in Short Interest

Oct -30

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.10%)

6. Segments

Real Estate Investment Trust

Expected Growth: 8.1%

AGNC Investment Corp's growth is driven by increasing demand for mortgage-backed securities, low interest rates, and a steady income stream from its investments in agency residential mortgage-backed securities.

7. Detailed Products

Agency Mortgage-Backed Securities (MBS)

AGNC Investment Corp. invests in agency MBS, which are securities backed by residential mortgages and guaranteed by government-sponsored entities such as Fannie Mae and Freddie Mac.

Non-Agency Residential Mortgage-Backed Securities (RMBS)

AGNC Investment Corp. invests in non-agency RMBS, which are securities backed by residential mortgages but not guaranteed by government-sponsored entities.

Commercial Mortgage-Backed Securities (CMBS)

AGNC Investment Corp. invests in CMBS, which are securities backed by commercial mortgages on properties such as office buildings, apartments, and shopping centers.

Residential Mortgage Investments

AGNC Investment Corp. invests in residential mortgage investments, including whole loans and mortgage servicing rights.

Credit Investments

AGNC Investment Corp. invests in credit investments, including corporate debt, asset-backed securities, and other credit-related instruments.

8. AGNC Investment Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for AGNC Investment Corp. is medium, as there are alternative investment options available to investors, but AGNC's diversified portfolio and strong management team help to mitigate this threat.

Bargaining Power Of Customers

The bargaining power of customers for AGNC Investment Corp. is low, as investors have limited negotiating power due to the company's strong brand and diversified portfolio.

Bargaining Power Of Suppliers

The bargaining power of suppliers for AGNC Investment Corp. is medium, as the company relies on a diverse range of suppliers for its investment portfolio, but has some negotiating power due to its size and scale.

Threat Of New Entrants

The threat of new entrants for AGNC Investment Corp. is low, as the company has a strong brand and established presence in the market, making it difficult for new entrants to gain traction.

Intensity Of Rivalry

The intensity of rivalry for AGNC Investment Corp. is high, as the company operates in a highly competitive industry with many established players, and must continually innovate and adapt to stay ahead.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 88.15%
Debt Cost 11.17%
Equity Weight 11.85%
Equity Cost 11.17%
WACC 11.17%
Leverage 743.61%

11. Quality Control: AGNC Investment Corp. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Starwood Property Trust

A-Score: 7.4/10

Value: 6.3

Growth: 6.1

Quality: 7.1

Yield: 10.0

Momentum: 5.0

Volatility: 9.7

1-Year Total Return ->

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Rithm Capital

A-Score: 6.8/10

Value: 6.6

Growth: 2.3

Quality: 6.0

Yield: 10.0

Momentum: 6.0

Volatility: 10.0

1-Year Total Return ->

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Annaly Capital Management

A-Score: 6.7/10

Value: 5.6

Growth: 3.8

Quality: 5.4

Yield: 10.0

Momentum: 6.0

Volatility: 9.7

1-Year Total Return ->

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Blackstone Mortgage Trust

A-Score: 6.4/10

Value: 2.7

Growth: 4.4

Quality: 7.2

Yield: 10.0

Momentum: 5.5

Volatility: 8.7

1-Year Total Return ->

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Arbor Realty Trust

A-Score: 5.9/10

Value: 7.0

Growth: 4.6

Quality: 5.9

Yield: 10.0

Momentum: 2.5

Volatility: 5.3

1-Year Total Return ->

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AGNC Investment

A-Score: 5.8/10

Value: 3.6

Growth: 3.2

Quality: 4.0

Yield: 9.0

Momentum: 5.0

Volatility: 10.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

25.52$

Current Price

25.52$

Potential

-0.00%

Expected Cash-Flows