Does Trending Stock AGNC Investment Corp. (AGNC) is a buy it now?

AGNC Investment (AGNC) is one of the most viewed stocks by visitors to Zacks.com lately. So it might be worth looking at some of the factors that could affect the stock’s short-term performance.

Shares of this real estate investment trust have returned -28.3% over the past month compared to the -5.1% change in the Zacks S&P 500 composite. Industry Zacks REIT and Equity Trust, to which AGNC Investment belongs, lost 20.7% during this period. Now the key question is: where could the stock be heading in the near term?

While press releases or rumors about a substantial change in a company’s trading outlook usually “trend” its stock and cause an immediate price change, there are always fundamental facts that ultimately dominate the take. purchase and retention decision.

Revisions to earnings estimates

Rather than focusing on anything else, at Zacks we prioritize assessing change in a company’s earnings projection. Indeed, we believe that the fair value of its shares is determined by the present value of its future earnings streams.

Our analysis is primarily based on how sell-side analysts covering the stock revise their earnings estimates to reflect the latest trading trends. When a company’s earnings estimates increase, the fair value of its stock also increases. And when the fair value of a stock is higher than its current market price, investors tend to buy the stock, causing its price to rise. For this reason, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term movements in stock prices.

For the current quarter, AGNC Investment is expected to post earnings of $0.71 per share, indicating a -5.3% change from the prior year quarter. The Zacks consensus estimate has changed by +11.9% over the past 30 days.

For the current year, the consensus earnings estimate of $2.85 indicates a change of -5.6% from the prior year. Over the last 30 days, this estimate has changed by +6%.

For the next fiscal year, the consensus earnings estimate of $2.11 indicates a change of -26.2% from what AGNC Investment is expected to report a year ago. Over the past month, the estimate has changed by +5.4%.

With an impressive externally audited track record, our proprietary stock rating tool – the Zacks Ranking – is a more conclusive indicator of a stock’s short-term price performance, as it effectively harnesses the power of earnings estimate revisions. . The magnitude of the recent shift in the consensus estimate, along with three other factors related to earnings estimates, resulted in a Zacks No. 2 (buy) ranking for AGNC Investment.

The chart below shows the evolution of the company’s consensus 12-month EPS estimate:

12 month EPS

Revenue Growth Forecasts

While a company’s earnings growth is arguably the best indicator of its financial health, nothing happens if it can’t grow its revenue. It is almost impossible for a company to increase its profits without increasing its revenue for long periods of time. Therefore, knowing the potential revenue growth of a business is crucial.

For AGNC Investment, the consensus sales estimate for the current quarter of $289.1 million indicates a year-over-year change of -34.7%. For the current and next fiscal year, the estimates of $1.31 billion and $953.4 million indicate variations of -26.8% and -27.1%, respectively.

Latest reported results and history of surprises

AGNC Investment reported revenue of $315 million last quarter, representing a -29.4% year-over-year change. EPS of $0.83 for the same period versus $0.76 a year ago.

Compared to Zacks’ consensus estimate of $198 million, reported revenue is a surprise of +59.09%. Surprise EPS was +38.33%.

The company has exceeded consensus EPS estimates in each of the past four quarters. The company has exceeded consensus revenue estimates three times during this period.

Evaluation

Without considering the valuation of a stock, no investment decision can be effective. Crucial to predicting a stock’s future price performance is whether its current price accurately reflects the intrinsic value of the underlying business and the company’s growth prospects.

Compare the present value of a company’s valuation multiples, such as its price/earnings (P/E), price/sales (P/S), and price/cash flow (P/CF), to its own historical values ​​help determine whether its stock is fairly priced, overvalued or undervalued, while comparing the company against its peers on these metrics gives a good idea of ​​the reasonableness of its price.

As part of the Zacks Style Scores system, the Zacks Value Style Score (which assesses both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on. ), which helps determine whether a stock is overvalued, correctly valued, or temporarily undervalued.

AGNC Investment is rated A on this front, indicating that it is trading at a discount to its peers. Click here to see values ​​for some of the rating metrics that led to this rating.

Conclusion

The facts discussed here and plenty of other information on Zacks.com might help determine whether it’s worth paying attention to the market buzz about AGNC Investment. However, its Zacks No. 2 ranking suggests it could outperform the broader market in the near term.

Zacks names ‘only one best choice for doubling up’

From thousands of stocks, 5 Zacks experts have each picked their favorite to skyrocket by +100% or more in the coming months. Of these 5, Research Director Sheraz Mian selects one to have the most explosive advantage of all.

It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could jump in at any moment.

This company could rival or surpass other recent Zacks stocks which are expected to double, such as Boston Beer Company which jumped +143.0% in just over 9 months and NVIDIA which jumped +175.9% in one. year. At the top

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AGNC Investment Corp. (AGNC): Free Share Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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