Annaly Capital Management
NLY
$22.62
-1.31%
Annaly Capital Management, Inc. is a leading American mortgage real estate investment trust (mREIT) that generates income by investing in a diversified portfolio of mortgage assets, primarily Agency mortgage-backed securities (MBS) collateralized by residential mortgages, along with residential credit and mortgage servicing rights. As one of the largest and most established players in the mREIT sector, Annaly is recognized for its scale, prudent risk management, and consistent dividend distributions, making it a core holding for income-focused investors. The current investor narrative centers on the impact of Federal Reserve policy on mortgage spreads and prepayment rates, with recent headlines highlighting both near-term valuation pressure from a potentially hawkish Fed under Kevin Warsh and the long-term opportunity for well-capitalized mREITs to capitalize on dislocations. Additionally, the company's strategic shift toward more credit-sensitive assets and its ability to maintain a robust book value are key points of debate among analysts and shareholders.…
NLY
Annaly Capital Management
$22.62
Related headlines
Investment Opinion: Should I buy NLY Today?
Based on the analysis, I rate NLY as a Hold. The stock offers a high dividend yield of 13.16% and trades at a low PE of 7.66x, but the negative free cash flow and high leverage introduce significant risk. The analyst consensus is bullish with an average target of $24.23, implying a 5.2% upside, which is modest. The thesis is that NLY is a suitable income investment for those seeking high yield, but it is not a growth story and carries interest rate risk.
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NLY 12-Month Price Forecast
The AI assessment is neutral with medium confidence. The stock's low valuation and high yield are appealing, but the negative free cash flow and high leverage temper enthusiasm. The key factor is the Fed's policy direction: if rates stabilize, the stock could perform well, but if they rise, it could suffer. I would upgrade to bullish if the company demonstrates improved cash flow and the Fed signals a dovish pivot, and downgrade to bearish if the dividend is cut or book value declines sharply.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Annaly Capital Management's 12-month outlook, with a consensus price target around $24.23 and implied upside of +7.1% versus the current price.
Average Target
$24.23
0 analysts
Implied Upside
+7.1%
vs. current price
Analyst Count
—
covering this stock
Price Range
$23 - $25
Analyst target range
Annaly is covered by 11 analysts, with a consensus recommendation leaning bullish, as evidenced by recent actions from firms like Piper Sandler (Overweight), RBC Capital (Outperform), and JP Morgan (Overweight). The average target price is $24.23, implying an upside of approximately 5.2% from the current price of $23.04. The distribution of ratings includes a mix of Overweight, Outperform, Buy, and Neutral, with no Sell ratings, indicating a generally positive sentiment among analysts. The target price range spans from a low of $22.50 to a high of $25.00, with the high target suggesting potential for further appreciation if the company can capitalize on favorable mortgage spreads and maintain its dividend. The low target, however, reflects concerns about potential margin compression and adverse Fed policy. The relatively narrow spread between the low and high targets (about 11%) suggests moderate conviction among analysts, with the consensus pointing to a modest upside. Recent ratings have been reaffirmed rather than upgraded or downgraded, indicating stability in analyst expectations.
Bulls vs Bears: NLY Investment Factors
Annaly presents a classic income-investing opportunity with a high dividend yield and low valuation, but it carries significant risks due to its high leverage and sensitivity to interest rates. The bull case is supported by strong revenue growth, a low PE, and a bullish analyst consensus, while the bear case is driven by negative free cash flow, high debt, and potential Fed tightening. Currently, the evidence slightly favors the bulls, as the stock's valuation and yield provide a cushion, but the key tension lies in the Fed's policy trajectory: if rates rise faster than expected, the stock could face significant downside, whereas a stable or dovish Fed could allow the dividend to remain sustainable and the stock to appreciate toward analyst targets.
Bullish
- Attractive Valuation with Low PE: NLY trades at a trailing PE of 7.66x and forward PE of 7.41x, which is low compared to the broader market and typical for mREITs. This suggests the stock is reasonably priced relative to its earnings power, providing a margin of safety for income investors.
- High Dividend Yield of 13.16%: The stock offers a dividend yield of 13.16%, which is exceptionally high and attractive for income-focused investors. The payout ratio of 92.85% indicates the dividend is well-covered by earnings, though it leaves little room for growth.
- Revenue Growth of 9.58% YoY: In Q1 2026, revenue grew 9.58% year-over-year to $1.63 billion, driven by strong performance in the Agency segment. This growth demonstrates the company's ability to expand its asset base and generate higher income in a challenging rate environment.
- Analyst Consensus Bullish: With 11 analysts covering the stock, the average target price is $24.23, implying a 5.2% upside from the current price of $23.04. No Sell ratings exist, and recent actions from Piper Sandler, RBC Capital, and JP Morgan are Overweight/Outperform, reflecting positive sentiment.
Bearish
- High Debt-to-Equity Ratio of 6.95: NLY's debt-to-equity ratio of 6.95 is extremely high, reflecting the leveraged nature of mREITs. This amplifies risk, as any adverse move in interest rates or credit spreads could significantly impact book value and earnings.
- Negative Free Cash Flow of -$1.58B: The company has negative free cash flow of -$1.58 billion on a trailing twelve-month basis, indicating that it is not generating enough cash to cover its dividend and capital needs. This could force the company to rely on external financing or reduce distributions.
- Sensitivity to Fed Policy: Recent news highlights that a potentially hawkish Fed under Kevin Warsh could create near-term valuation pressure for mortgage REITs. Higher rates and balance sheet reduction could compress net interest margins and reduce the value of MBS holdings.
- Underperformance vs. S&P 500: Over the past year, NLY returned 9.77% compared to the S&P 500's 18.56%, underperforming by 8.79 percentage points. This relative weakness may persist if the market continues to favor growth stocks over income-oriented names.
NLY Technical Analysis
Annaly's stock has exhibited a broadly upward trend over the past year, with a 1-year price change of +9.77%, though it has lagged the S&P 500's +18.56% gain over the same period. The current price of $23.04 sits at approximately 86% of its 52-week range (between $20.00 low and $24.52 high), indicating that the stock is trading closer to its highs but not at overbought extremes. This positioning suggests a moderate bullish sentiment, with the stock having recovered from its lows but still below its peak, leaving room for further upside if momentum persists.
Beta
1.24
1.24x market volatility
Max Drawdown
-14.9%
Largest decline past year
52-Week Range
$20-$25
Price range past year
Annual Return
+6.7%
Cumulative gain past year
| Period | NLY Return | S&P 500 |
|---|---|---|
| 1m | -0.4% | +2.0% |
| 3m | +6.8% | +1.0% |
| 6m | -1.5% | +11.8% |
| 1y | +6.7% | +18.1% |
| ytd | -1.2% | +11.7% |
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NLY Fundamental Analysis
Annaly's revenue trajectory has been robust, with the most recent quarter (Q1 2026) reporting revenue of $1.63 billion, a 9.58% year-over-year increase from $1.49 billion in Q1 2025. This growth is part of a multi-quarter trend where revenue has fluctuated between $1.49 billion and $1.95 billion over the past eight quarters, with the latest quarter showing a sequential increase from $1.79 billion in Q4 2025. The growth is primarily driven by the Agency segment, which remains the largest revenue contributor, while the Residential Credit and MSR segments provide diversification. The revenue growth, albeit modest, indicates stable demand for mortgage assets and effective portfolio management.
Quarterly Revenue
$1.6B
2026-03
Revenue YoY Growth
+9.6%
YoY Comparison
Gross Margin
98.9%
Latest Quarter
Free Cash Flow
$-1.6B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is NLY Overvalued?
Given that Annaly has positive net income, the primary valuation metric selected is the price-to-earnings (PE) ratio. The trailing PE is 7.66x, while the forward PE is 7.41x, based on estimated EPS of $3.02 for the next fiscal year. The slight discount in the forward PE suggests that the market expects earnings to improve modestly, which is consistent with the company's recent earnings growth. This low PE multiple is typical for mREITs, which are often valued based on earnings power and dividend yield rather than growth, and it reflects the market's perception of the risks associated with interest rate fluctuations and prepayment risk.
PE
7.7x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 1x~34x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
18.1x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are substantial for Annaly. The company's debt-to-equity ratio of 6.95 indicates heavy reliance on borrowed funds, which amplifies the impact of interest rate changes on earnings and book value. Negative free cash flow of -$1.58 billion over the trailing twelve months raises concerns about the sustainability of its dividend, especially given a payout ratio of 92.85%. Additionally, the net margin of 30.28% is volatile, as seen in the wide swings in quarterly net income, from $1.01 billion in Q4 2025 to $57 million in Q2 2025, reflecting the sensitivity of mREIT earnings to market conditions.