Value
5.6/10data confidence 50%| Component | Sub-score |
|---|---|
| P/S | 7.0 |
| p ocf | 6.2 |
| Analyst target | 5.0 |
- ▸P/OCF: 17.9x (FFO proxy — REITs gated off P/E)
NLY · Why this verdict
Why Annaly Capital Management (NLY) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.6/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Annaly Capital Management has delivered four consecutive earnings beats and strong 49% year-over-year growth, but its 89% Agency MBS concentration and current price above analyst consensus make the near-term risk-reward unfavorable for adding new exposure.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Approximately 89% of Annaly's portfolio is in Agency mortgage-backed securities, meaning its earnings and book value are highly sensitive to changes in interest rate spreads and Federal Reserve policy with limited diversification buffer. Bear case | Annaly reduces its Agency MBS concentration below 85% or maintains net interest margin above 2.0% over the next 12 months as rates evolve. | ↓Deteriorating |
| CounterAgency MBS carry an implicit government guarantee, so concentration in this asset class is substantially lower risk than comparable fixed-income alternatives at similar yield levels. | ||
Annaly has beaten earnings estimates in all 4 of the last 4 quarters, with each beat in a narrow range suggesting management has strong visibility into its net interest income and hedging performance. Earnings | Annaly continues beating earnings estimates in at least 3 of the next 4 quarters, maintaining its track record of consistent delivery. | ↑Improving |
| CounterAverage EPS surprises are only about 1.9%, which is barely above analyst estimates and may reflect conservative guidance rather than genuine operational strength. | ||
Revenue growth of approximately 49% year-over-year places Annaly among the strongest growers in its sector, reflecting either favorable rate positioning or portfolio expansion that has meaningfully increased earnings power. Growth breakdown | Revenue growth remains above 20% year-over-year for at least 2 of the next 4 quarters. | →Stable |
| CounterMortgage REIT revenue can be volatile and driven by spread dynamics that can reverse quickly if the yield curve flattens or inverts again. | ||
The current price of $22.24 has already reached or exceeded the analyst consensus price target, leaving virtually no upside in analyst models and a negative risk-reward ratio at current levels. Warnings | Analyst consensus price target is revised upward by at least 10% within 6 months, restoring meaningful headroom above the current price. | ↓Deteriorating |
| CounterAnalyst targets for mortgage REITs often lag market moves, and the technical breakout pattern with a golden cross and RSI of 59 suggests momentum could carry the stock higher. | ||
Approximately 89% of Annaly's portfolio is in Agency mortgage-backed securities, meaning its earnings and book value are highly sensitive to changes in interest rate spreads and Federal Reserve policy with limited diversification buffer.
↓DeterioratingBear case
- Expectation
- Annaly reduces its Agency MBS concentration below 85% or maintains net interest margin above 2.0% over the next 12 months as rates evolve.
CounterAgency MBS carry an implicit government guarantee, so concentration in this asset class is substantially lower risk than comparable fixed-income alternatives at similar yield levels.
Annaly has beaten earnings estimates in all 4 of the last 4 quarters, with each beat in a narrow range suggesting management has strong visibility into its net interest income and hedging performance.
↑ImprovingEarnings
- Expectation
- Annaly continues beating earnings estimates in at least 3 of the next 4 quarters, maintaining its track record of consistent delivery.
CounterAverage EPS surprises are only about 1.9%, which is barely above analyst estimates and may reflect conservative guidance rather than genuine operational strength.
Revenue growth of approximately 49% year-over-year places Annaly among the strongest growers in its sector, reflecting either favorable rate positioning or portfolio expansion that has meaningfully increased earnings power.
→StableGrowth breakdown
- Expectation
- Revenue growth remains above 20% year-over-year for at least 2 of the next 4 quarters.
CounterMortgage REIT revenue can be volatile and driven by spread dynamics that can reverse quickly if the yield curve flattens or inverts again.
The current price of $22.24 has already reached or exceeded the analyst consensus price target, leaving virtually no upside in analyst models and a negative risk-reward ratio at current levels.
↓DeterioratingWarnings
- Expectation
- Analyst consensus price target is revised upward by at least 10% within 6 months, restoring meaningful headroom above the current price.
CounterAnalyst targets for mortgage REITs often lag market moves, and the technical breakout pattern with a golden cross and RSI of 59 suggests momentum could carry the stock higher.
Per-dimension breakdown
Quality
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 6.5 |
| ROA | 1.6 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 2.2 |
| Moat | 6.9 |
| Piotroski F | 6.7 |
- ▸Strong margins: 91%
Growth
5.0/10data confidence 50%Momentum
2.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 1.4 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 5.1 |
- ▸Capitulation risk (RSI 15, below 200MA)
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+1.9%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.0 |
| Price target | 7.4 |
| erm sentiment | 5.0 |
Insider
5.5/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 6.0 |
- ▸Insider selling (low materiality) — $1,144,500 (0.007% of mkt cap)
Peer rank
5.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.8 |
| quality rank | 7.8 |
| growth rank | 9.3 |
- ▸Best-in-class margins
- ▸Industry growth leader
Technical
8.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 9.4 |
| support resistance | 9.8 |
| 52w position | 7.2 |
Risk (lower is worse)
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 10.0 |
| volatility | 7.3 |
| put call | 0.8 |
| implied vol | 2.5 |
| max pain risk | 3.0 |
| beta | 6.0 |
| debt equity | 0.0 |
- ▸Elevated put/call: 1.88
- ▸High IV: 65%
- ▸Above max pain $14
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 3.8 |
| dividend safety | 5.0 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 14.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:27d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:2.5<4.5
- ASYMMETRY:0.5<1.5@spot
Warning (0)
none
Reward-to-Risk
0.46
Upside
+2.3%
Downside
5.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeCatalyst-Driven — Earnings in 27d with 4/4 beat streak
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.4 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Technical at 8.8) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:2.5<4.5, ASYMMETRY:0.5<1.5@spot) reinforce the read. Current asymmetry R:R is 0.46 — supplementary context, not the trigger for this path.
The strongest dimensions are Technical at 8.8, Quality at 6.7, and Sentiment at 6.6; the weakest are Momentum at 2.5, Risk (lower is worse) at 4.2, and Growth at 5.0. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 0.46 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Agency Mbs Concentration
Trip ifAgency MBS portfolio concentration rises above 92% while net interest margin falls below 1.5%.
- P2Four Quarter Earnings Beat Streak
Trip ifEarnings surprise falls below 0% in at least 2 of the next 4 quarters.
- P3Strong Revenue Growth
Trip ifRevenue growth declines below 10% year-over-year for 2 consecutive quarters.
- P4Price Above Analyst Target
Trip ifPrice rises above $24 while analyst consensus target remains below $23, widening the gap to more than $1.