American Capital Agency Earnings: Here’s Why Shares are Down Now

American Capital Agency Corp. (NASDAQ:AGNC) delivered a profit and beat Wall Street’s expectations, AND beat the revenue expectation. The revenue beat is a positive sign to shareholders seeking high growth out of the company. Shares are down 7.25%.

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American Capital Agency Corp. Earnings Cheat Sheet

Results:

Revenue: Decreased 47.62% to $407 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: American Capital Agency Corp. reported adjusted EPS income of $0.64 per share. By that measure, the company beat the mean analyst estimate of $0. It beat the average revenue estimate of $22.1 million.

Quoting Management: “Fixed-rate agency MBS prices declined considerably more than both U.S. Treasury securities and interest rate swaps during the first quarter, as market participants began to price in an early end to the Federal Reserve’s third round of quantitative easing (“QE3″) amid stronger economic data,” commented Gary Kain, President and Chief Investment Officer. “Specified mortgage securities also materially underperformed generic securities as investors focused on extension risk instead of prepayment risk. This underperformance of both TBAs and specified MBS led to the decline in our net book value. However, as economic activity both globally and in the U.S. has weakened over the past month, interest rates have fallen again and mortgages have recovered some of their first quarter weakness.”

Key Stats (on next page)…

Revenue decreased 59.82% from $1.01 billion in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.89 to a loss $0. For the current year, the average estimate has moved down from a profit of $4.02 to a loss of $0 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)

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