NLY NYSE Russell 1000 Earnings call

Annaly Capital Management (NLY) · Q2 2026 results and valuation

Share price: $18.33 · 2026-11-11

Annaly Capital Management is a real estate investment trust that manages a diversified portfolio of residential mortgage finance assets. The company invests in agency mortgage-backed securities, residential credit, and mortgage servicing rights. It operates as an internally-managed corporation in the United States. Source: 10-K annual report (2026-02-12)

Results Q2 2026 vs Q1 2026 · previous quarter · published 22 Jul 2026 and 22 Apr 2026

Net income up 191.1% on the previous quarter. Management sounded restrained, in its script and in answers to analysts.

1 · Numbers

+191.1%

Net income vs Q1 2026

Outlook given

Net income 822.7M vs 282.7M

Against the same quarter last year (Q2 2025) it is +1340.8%, so it is not just seasonal.

Why Against the same quarter last year (+1340.8%), net income rose primarily due to higher average yields on the Agency portfolio from a weighted average coupon increase of 11 basis points, higher securitization volumes in the Residential Credit business, and favorable funding costs from lower average repo rates.

2 · How management spoke

Restrained

Less upbeat than 70% of company calls

Answers to analysts: cautious, in line with the script.

Similar to last call.

3 · What stood out

Annaly purchased $7.1 billion of loans in Q2, which is a new quarterly record for the business including whole loan bulk purchases in partnerships.

Valuation

Is Annaly Capital Management undervalued?

Reverse DCF on net income from the last full fiscal year (no meaningful free cash flow: a bank, insurer or a year of negative cash flow) (2025-12-31), grown for 10 years, discounted back, plus a terminal value. “Implied growth” is the rate the current price assumes.

At 10.0% growth a year (the standard assumption), the model's fair value is $57.75 a share — the stock trades 68% below it. Today's price assumes −7.3% growth a year.

Current price

$18.33

close of 2026-11-11

Market implies growth of i

-7.3% for 10 yrs

Fair value / share

$57.75

Buy below

$43.31

Price vs fair value

Undervalued 68%

Price vs buy-below price

Undervalued 58%

FCF growth / yr i Discount rate i Terminal growth i Margin of safety i

Official channels

The company's own website and social media accounts.

Read between the lines

Figure

Costs increased due to a 11 basis point rise in weighted average coupons to 5.11% and a 6 basis point decline in average repo rates to 3.84%.

Source quote
“The increase was primarily driven by higher average yields on our Agency portfolio, as our weighted average coupon increased 11 basis points to 5.11%, as well as higher securitization volumes within our Residential Credit business and favorable funding costs, with average repo rates declining 6 basis points to 3.84% during the quarter.”
Guidance

NLY's 2026 net supply is expected to be more muted than the $200 billion initially projected, with most people now expecting a total of $160 billion.
Figure

NLY delivered a 5.5% economic return this quarter because lower rate volatility provided a tailwind for the portfolio despite bond market pressures.

Source quote
“Despite this pressure on the bond market, lower rate volatility provided a tailwind for our portfolio this past quarter, and we delivered a 5.5% economic return, once again demonstrating the strong performance of our diversified housing finance model.”
Figure

NLY generated $0.79 of earnings available for distribution, marking the ninth consecutive quarter that the EAD exceeded the dividend.

Source quote
“Additionally, we generated $0.79 of earnings available for distribution, marking the ninth consecutive quarter that our EAD has exceeded the dividend.”
Figure

The Agency portfolio grew by roughly $3 billion to $95 billion in market value, increasing the capital allocation to Agency to 57%.

Source quote
“Given this attractive environment, we grew our Agency portfolio by roughly $3 billion, ending the quarter at $95 billion in market value, which increased our capital allocation to Agency to 57%.”

4 more

Figure

Annaly purchased $7.1 billion of loans in Q2, which is a new quarterly record for the business including whole loan bulk purchases in partnerships.

Source quote
“Including whole loan bulk purchases in our partnerships, Annaly purchased $7.1 billion of loans in Q2, which is a new quarterly record for the business.”
Figure

Annaly remains the largest issuer of Expanded Credit mortgages and the second largest issuer overall as Annaly Capital Management closed 13 deals for $6.8 billion in principal balance in the second quarter, creating approximately $780 million…

Source quote
“Annaly remains the largest issuer of Expanded Credit mortgages and the second largest issuer overall as we closed 13 deals for $6.8 billion in principal balance in the second quarter, creating approximately $780 million of proprietary investments.”
Figure

At a weighted average note rate of 3.3%, the lowest among the 20 largest MSR holders, Annaly Capital Management's portfolio continues to generate durable, predictable cash flows with meaningful prepayment protection.
Figure

The company reported a 5.5% economic return for the quarter, including a $0.75 dividend, bringing the first-half economic return to 6.9%.

Source quote
“Including our $0.75 quarterly dividend, we generated a positive economic return of 5.5% for the quarter, bringing our economic return for the first half of the year to 6.9%.”

Tone

How upbeat the language was, compared with other companiesi. Dot: Q2 2026. Ring: Q1 2026.

Prepared remarks Restrained (was restrained)

Answers to analysts Cautious (was cautious)

Script and answers carried a similar tone, so the script's message held up under questioning.

Sentences that drove the tone

“Despite record volumes, the credit quality of our loan pipeline continues to improve, best evidenced by the locked pipeline 765 FICO with 67% CLTV.”

“Net interest margin increased 5 basis points to 1.76%, while net interest spread improved 8 basis points to 1.5%, with both measures benefiting from higher asset yields, which more than...”

“These benefits were partially offset by lower levels of swap income, reflecting lower average receive rates as SOFR declined during the quarter.”

Full figures

USD · SEC EDGAR XBRL (10-Q, period end 2026-06-30)

Metric	Q2 2026period end 2026-06-30	Q1 2026period end 2026-03-31	Change	Q2 2025	YoY
Operating income	834.7M	289.0M	+188.8%	60.8M	+1272.6%
Net income	822.7M	282.7M	+191.1%	57.1M	+1340.8%
EPS	1.06	0.33	+221.2%	0.03	+3433.3%
P/E today 12.9	5.4	6.8	−1.4	18.1	−12.7

Topics

Most discussed now

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Faded since Q1 2026

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Latest announcements

Official filings, newest first. Summaries are generated from each filing and its attachment; every figure is checked against the source.

2026-10-20 Regulation FD disclosure · SEC 8-K
2026-10-20 Other events · SEC 8-K
2026-10-20 Results of operations · SEC 8-K
2026-10-02 Change to shareholder rights; Articles or bylaws amended · SEC 8-K
Annaly Capital Management, Inc. redeemed all 17,700,000 shares of 6.750% Series I Preferred Stock and reclassified them as common stock as of October 2, 2026.
2026-08-19 Regulation FD disclosure; Other events · SEC 8-K
Annaly Capital Management, Inc. announced the redemption of all 17,700,000 shares of its 6.750% Series I Preferred Stock at a price of $25.00 per share on October 1, 2026.
2026-07-21 Regulation FD disclosure · SEC 8-K
Annaly Capital Management reported earnings available for distribution of $0.79 per share and a total portfolio of $109.4 billion, with the correspondent channel funding increasing 38% year-over-year.
2026-07-21 Other events · SEC 8-K
Annaly Capital Management reported a GAAP net income per average common share of $1.06 for the quarter ended June 30, 2026, compared to $0.33 in the previous quarter.
2026-07-21 Results of operations · SEC 8-K
Annaly Capital Management reported a GAAP net income of $1.06 per average common share for the quarter ended June 30, 2026, compared to $0.03 in the same quarter of the previous year.

Balance sheet & ownership

From SEC filings; short interest is FINRA data via Yahoo. Collected 2026-10-13.

Cash & runway

Cash & equivalents

$1.41B

2023-12-31

Implied runway

—

operating cash flow positive over the TTM window

Dilution

weighted-average basic shares, per quarter. Change: +19.1% YoY, +2.2% QoQ.

Quarter	Shares
Q3 2024	515.7M
Q1 2025	587.1M
Q2 2025	620.2M
Q3 2025	656.3M
Q1 2026	722.7M
Q2 2026	738.9M

Shares outstanding: 753.7M (2026-07-24)

Insider transactions

Form 4 open-market trades (codes S/P), trailing 12 months. 23 filings parsed.

Sold by insiders

310.3K shares

$7.0M · 9 transactions

Bought by insiders

0 shares

0 transactions

Net direction

net selling

Catalyst calendar

management-stated targets — from the latest earnings call; plans, not promises.

throughout the balance of the year

supply to remain healthy

Source quote
“Bulk supply in the second quarter decreased modestly from Q1, though we expect supply to remain healthy throughout the balance of the year given ongoing originator profitability constraints and industry consolidation.”
future periods

OpEx-to-equity ratio to moderate

Source quote
“The increase was driven in part by elevated expenses incurred during the quarter, which we expect to moderate in future periods.”
this quarter

out-earn the dividend

Source quote
“We were certainly encouraged by the fact that we feel like it's earnable over the foreseeable future, and we're on track to modestly out-earn the dividend this quarter, almost equal.”
July

priced four transactions

Source quote
“We're making a lot of progress. We've priced four transactions already in July, and we're in the market with another deal as we speak.”
yesterday

added a package

Source quote
“As a matter of fact, we added a package just yesterday.”