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1. Company Snapshot

1.a. Company Description

Annaly Capital Management, Inc., a diversified capital manager, engages in mortgage finance and corporate middle market lending.The company invests in agency mortgage-backed securities, mortgage servicing rights, Agency commercial mortgage-backed securities, non-Agency residential mortgage assets, residential mortgage loans, credit risk transfer securities, corporate debts, and other commercial real estate investments.It has elected to be taxed as a real estate investment trust (REIT).


As a REIT, it is not subject to federal income tax to the extent that it distributes its taxable income to its shareholders.The company was founded in 1996 and is based in New York, New York.

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1.b. Last Insights on NLY

Annaly Capital Management's recent performance was driven by improved asset yields and servicing income, supporting its Q3 earnings beat. A $1.5 billion buyback plan and $8.8 billion liquidity base underscore its drive to sustain strong shareholder returns. Easing mortgage rates and strategic shifts also contributed to its growth. The company's 13% dividend yield appears well-supported by its earnings. Additionally, a conservative balance sheet and strict leverage discipline have enabled the company to outperform peers. Its dividend sustainability is also attributed to stabilized inflation and improved net interest spreads.

1.c. Company Highlights

2. Annaly Capital Management's Q4 2025 Earnings: A Strong Finish to a Resilient Year

Annaly Capital Management reported earnings available for distribution per share of $0.74 in Q4 2025, beating estimates of $0.72. The company's economic return for the quarter was 8.6%, driven by strong investment gains. For the full year 2025, Annaly delivered an economic return of 20.2% and a total shareholder return of 40%. The company's book value per share increased 5% to $20.21 in Q4, driven by the strong investment performance.

Publication Date: Feb -10

📋 Highlights
  • Q4 Economic Return:: Generated 8.6% return, driven by strong fixed income markets and portfolio performance.
  • 2025 Total Shareholder Return:: Achieved 40% annual total shareholder return with 20.2% economic return for the year.
  • Agency Portfolio Growth:: Market value rose to $93 billion in 2025, reflecting a $22 billion annual increase and 5.6x conservative leverage.
  • MSR Portfolio Expansion:: Grew to $3.8 billion in Q4, up $280 million quarter-over-quarter and 15% year-over-year.
  • 2026 Outlook:: Projects mid-teens returns with reduced hedging costs and stable Agency MBS spreads post-GSE MBS purchases.

Financial Performance

The company's financial performance was robust, with earnings available for distribution per share increasing by $0.01 to $0.74 in Q4. The company's net interest income and investment gains drove this performance. Analysts estimated next year's revenue growth at -2.7%, but the company's diversified housing finance strategies and conservative leverage profile position it for continued resilience.

Portfolio Performance

Annaly's Agency portfolio ended 2025 at $93 billion in market value, an increase of nearly $6 billion in the quarter and $22 billion over the course of the year. The company's residential credit portfolio ended the fourth quarter at $8 billion in market value, up $1.1 billion quarter-over-quarter. The MSR portfolio ended the fourth quarter at $3.8 billion in market value, representing a nearly $280 million increase quarter-over-quarter.

Valuation and Outlook

With a Price-to-Book Ratio of 0.97, Annaly's valuation appears reasonable. The company's Dividend Yield is 12.37%, which is attractive for income investors. Annaly's management is optimistic about the company's outlook for 2026, citing a positive environment for its investment strategies. The company's ROE is 14.13%, indicating a strong return on equity.

Risk Factors

Annaly's management identified several risk factors, including global fiscal uncertainty, debt, and complacency. The company is also watching the potential impact of a G-fee cut on the prepayment environment and the MBS market. Additionally, the company's exposure to low coupon MBS is a risk, although it is managing this risk through hedging.

3. NewsRoom

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When Bubbles Pop, You Will Be Glad You Own High Dividends

Feb -11

Source: seekingalpha.com

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Thrivent Financial for Lutherans Reduces Holdings in Annaly Capital Management Inc $NLY

Feb -08

Source: defenseworld.net

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Annaly Capital: Strong Rate Setup For 2026

Feb -08

Source: seekingalpha.com

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Beyond The 15 Minutes Of Fame: Locking In +12% Yields With Agency MBS

Feb -04

Source: seekingalpha.com

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High-Yield Carnage In 2026

Feb -03

Source: seekingalpha.com

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Annaly Capital Management Inc $NLY Shares Purchased by Mediolanum International Funds Ltd

Feb -02

Source: defenseworld.net

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8% High Dividend Yield From Annaly Capital Preferred Share

Jan -30

Source: seekingalpha.com

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Annaly Q4 Earnings Surpass Estimates, Book Value Improves Y/Y

Jan -29

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.00%)

6. Segments

Real Estate Investment Trust

Expected Growth: 1%

Annaly Capital Management, Inc.'s Real Estate Investment Trust (REIT) growth is driven by increasing demand for mortgage-backed securities, diversification into commercial real estate, and a strong balance sheet. The company's ability to navigate interest rate fluctuations and its experienced management team also contribute to its growth.

7. Detailed Products

Agency Mortgage-Backed Securities

Annaly Capital Management, Inc. invests in agency mortgage-backed securities, which are guaranteed by government-sponsored entities such as Fannie Mae and Freddie Mac.

Non-Agency Residential Mortgage-Backed Securities

Annaly Capital Management, Inc. invests in non-agency residential mortgage-backed securities, which are not guaranteed by government-sponsored entities.

Commercial Mortgage-Backed Securities

Annaly Capital Management, Inc. invests in commercial mortgage-backed securities, which are backed by commercial properties such as office buildings and shopping centers.

Residential Mortgage Servicing Rights

Annaly Capital Management, Inc. acquires and manages residential mortgage servicing rights, which provide a steady stream of income from mortgage servicing fees.

Middle Market Lending

Annaly Capital Management, Inc. provides financing to middle-market companies through its middle market lending platform.

8. Annaly Capital Management, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Annaly Capital Management, Inc. is medium. While there are alternative investment options available, the company's diversified portfolio and expertise in mortgage-backed securities mitigate the threat.

Bargaining Power Of Customers

The bargaining power of customers is low for Annaly Capital Management, Inc. as the company's customers are primarily institutional investors who have limited negotiating power.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium for Annaly Capital Management, Inc. as the company relies on a diverse range of suppliers for its mortgage-backed securities, but has some negotiating power due to its scale.

Threat Of New Entrants

The threat of new entrants is low for Annaly Capital Management, Inc. due to the significant barriers to entry in the mortgage-backed securities market, including regulatory hurdles and the need for specialized expertise.

Intensity Of Rivalry

The intensity of rivalry is high for Annaly Capital Management, Inc. as the company operates in a highly competitive market with many established players, and must continually innovate and adapt to maintain its market position.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 53.98%
Debt Cost 11.86%
Equity Weight 46.02%
Equity Cost 11.86%
WACC 11.86%
Leverage 117.31%

11. Quality Control: Annaly Capital Management, Inc. passed 2 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: 7.3/10

Value: 7.0

Growth: 6.1

Quality: 6.6

Yield: 10.0

Momentum: 4.5

Volatility: 9.7

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Annaly Capital Management

A-Score: 7.2/10

Value: 6.9

Growth: 3.9

Quality: 5.6

Yield: 10.0

Momentum: 7.0

Volatility: 9.7

1-Year Total Return ->

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Rithm Capital

A-Score: 7.1/10

Value: 7.1

Growth: 3.9

Quality: 5.9

Yield: 10.0

Momentum: 6.0

Volatility: 10.0

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Blackstone Mortgage Trust

A-Score: 6.6/10

Value: 3.6

Growth: 4.4

Quality: 6.9

Yield: 10.0

Momentum: 6.0

Volatility: 8.7

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Arbor Realty Trust

A-Score: 6.2/10

Value: 8.1

Growth: 4.4

Quality: 7.3

Yield: 10.0

Momentum: 1.5

Volatility: 5.7

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AGNC Investment

A-Score: 6.0/10

Value: 4.1

Growth: 3.1

Quality: 4.0

Yield: 9.0

Momentum: 6.0

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

22.81$

Current Price

22.81$

Potential

-0.00%

Expected Cash-Flows