Since September 2025, Annaly Capital Management has been in a holding pattern, posting a small return of 2.2% while floating around $21.25.
Is now the time to buy Annaly Capital Management, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.
Why Do We Think Annaly Capital Management Will Underperform?
We're swiping left on Annaly Capital Management for now. Here are three reasons there are better opportunities than NLY and a stock we'd rather own.
1. Declining Net Interest Income Reflects Weakness
Markets consistently prioritize net interest income over non-recurring fees, recognizing its superior quality compared to the more unpredictable revenue streams.
Annaly Capital Management’s net interest income has declined by 11.4% annually over the last five years, much worse than the broader banking industry. A silver lining is that lending outperformed its other business lines.
2. Low Net Interest Margin Reveals Weak Loan Book Profitability
The net interest margin (NIM) is a key profitability indicator that measures the difference between what a bank earns on its loans and what it pays on its deposits. This metric measures how efficiently one can generate income from its core lending activities.
Over the past two years, we can see that Annaly Capital Management’s net interest margin averaged a poor breakeven, indicating the company has weak loan book economics.
3. EPS Trending Down
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Sadly for Annaly Capital Management, its EPS and revenue declined by 7.9% and 12.9% annually over the last five years. We tend to steer our readers away from companies with falling revenue and EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, Annaly Capital Management’s low margin of safety could leave its stock price susceptible to large downswings.
Final Judgment
Annaly Capital Management falls short of our quality standards. That said, the stock currently trades at 1× forward P/B (or $21.25 per share). This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think there are better stocks to buy right now. Let us point you toward an all-weather company that owns household favorite Taco Bell.
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