Annaly Capital Management Stock Appears To Be

GuruFocus.com
·4 min read

- By GF Value

The stock of Annaly Capital Management (NYSE:NLY, 30-year Financials) appears to be , according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $8.81 per share and the market cap of $12.3 billion, Annaly Capital Management stock is believed to be . GF Value for Annaly Capital Management is shown in the chart below.


Annaly Capital Management Stock Appears To Be
Annaly Capital Management Stock Appears To Be

.

Link: These companies may deliever higher future returns at reduced risk.

Companies with poor financial strength offer investors a high risk of permanent capital loss. To avoid permanent capital loss, an investor must do their research and review a company's financial strength before deciding to purchase shares. Both the cash-to-debt ratio and interest coverage of a company are a great way to to understand its financial strength. Annaly Capital Management has a cash-to-debt ratio of 0.18, which which ranks better than 76% of the companies in REITs industry. The overall financial strength of Annaly Capital Management is 4 out of 10, which indicates that the financial strength of Annaly Capital Management is poor. This is the debt and cash of Annaly Capital Management over the past years:

Annaly Capital Management Stock Appears To Be
Annaly Capital Management Stock Appears To Be

Investing in profitable companies carries less risk, especially in companies that have demonstrated consistent profitability over the long term. Typically, a company with high profit margins offers better performance potential than a company with low profit margins. Annaly Capital Management has been profitable 7 years over the past 10 years. During the past 12 months, the company had revenues of $-584.7 million and loss of $0.69 a share. Its operating margin of 0.00% in the bottom 10% of the companies in REITs industry. Overall, GuruFocus ranks Annaly Capital Management's profitability as poor. This is the revenue and net income of Annaly Capital Management over the past years:

Annaly Capital Management Stock Appears To Be
Annaly Capital Management Stock Appears To Be

Growth is probably the most important factor in the valuation of a company. GuruFocus research has found that growth is closely correlated with the long term stock performance of a company. A faster growing company creates more value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth of Annaly Capital Management is 0%, which ranks in the bottom 10% of the companies in REITs industry. The 3-year average EBITDA growth rate is 0%, which ranks in the bottom 10% of the companies in REITs industry.

One can also evaluate a company's profitability by comparing its return on invested capital (ROIC) to its weighted average cost of capital (WACC). Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. If the return on invested capital exceeds the weighted average cost of capital, the company is likely creating value for its shareholders. During the past 12 months, Annaly Capital Management's ROIC is 0.00 while its WACC came in at 9.93. The historical ROIC vs WACC comparison of Annaly Capital Management is shown below:

Annaly Capital Management Stock Appears To Be
Annaly Capital Management Stock Appears To Be

In summary, the stock of Annaly Capital Management (NYSE:NLY, 30-year Financials)is believed to be . The company's financial condition is poor and its profitability is poor. Its growth ranks in the bottom 10% of the companies in REITs industry. To learn more about Annaly Capital Management stock, you can check out its 30-year Financials here. To find out the high quality companies that may deliever above average returns, please check out GuruFocus High Quality Low Capex Screener. This article first appeared on GuruFocus.

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