AGNC Investment Corp. (AGNCO) Stock: Beats Q125 EPS Forecast Despite Book Value Drop

TLDR

AGNC Investment Corp. (NASDAQ: $AGNCO) closed at $24.40 on April 21, down 0.65% for the day. The company announced better-than-expected Q1 2025 earnings, reporting adjusted EPS of $0.44, which topped the Zacks consensus estimate of $0.41. Net income came in at $50 million, or $0.02 per share on a GAAP basis.

AGNC Investment Corp. (AGNCO)

While the company’s comprehensive income was $0.12 per share, it included $0.10 from other comprehensive income due to mark-to-market investment gains. This quarter’s result builds on the company’s reputation for strong returns in the mortgage REIT space.

Dividend and Book Value Movement

AGNC declared a total of $0.36 in dividends per common share for the first quarter, aligning with shareholder expectations. However, its tangible net book value per share decreased by $0.16 from the previous quarter to $8.25, a 1.9% drop. This decline weighed on the company’s economic return, which stood at 2.4% for the quarter.

High Leverage and Portfolio Details

As of March 31, AGNC’s leverage remained elevated. The company reported 7.5x “at risk” leverage based on tangible net book value, slightly higher than the 7.3x quarterly average. Its investment portfolio totaled $78.9 billion, including:

Most of the holdings—96%—were in 30-year fixed-rate MBS and TBA securities, with weighted average coupons of 5.05%.

The company also maintained unencumbered cash and Agency MBS worth $6.0 billion, which accounted for 63% of tangible equity.

Interest Spread and Market Outlook

AGNC recorded a 2.12% annualized net interest spread in Q1 2025. The portfolio had an average projected life CPR of 8.3%, while the actual CPR for the quarter was 7.0%, reflecting stable prepayment activity.

Despite the drop in tangible book value, AGNC’s yield remains attractive at 9.80%, based on a forward dividend of $2.39. That could appeal to income-focused investors in a volatile market.

Stock Performance and Upcoming Earnings

AGNCO has delivered a 9.53% return over the past year, outperforming the S&P 500’s 3.84%. However, it is down 1.79% year-to-date as of April 21. In comparison, the S&P 500 has dropped 12.3% over the same period.

The next earnings date is expected between July 21 and July 25, 2025. Analysts will closely monitor how book value and earnings per share trend, especially given ongoing pressure from interest rate movements and portfolio valuation.

AGNC also issued 49.7 million shares through at-the-market offerings in Q1, raising $509 million, a move that supports liquidity but can dilute book value.

Conclusion

While AGNC Investment Corp. beat earnings expectations and offers a high dividend yield, challenges persist due to falling book value and high leverage. Investors should watch closely for any shift in the company’s leverage or dividend strategy in the next quarter.

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