As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q2. Today, we are looking at thrifts & mortgage finance stocks, starting with AGNC Investment (NASDAQ:AGNC).
Thrifts & Mortgage Finance institutions operate by accepting deposits and extending loans primarily for residential mortgages, earning revenue through interest rate spreads (difference between lending rates and borrowing costs) and origination fees. The industry benefits from demographic tailwinds as millennials enter prime homebuying age, technological advancements streamlining the loan approval process, and potential interest rate stabilization improving affordability. However, significant headwinds include net interest margin compression during rate volatility, increased competition from fintech disruptors offering digital-first experiences, mounting regulatory compliance costs, and potential housing market corrections that could impact loan portfolios and default rates.
The 18 thrifts & mortgage finance stocks we track reported a slower Q2. As a group, revenues missed analysts’ consensus estimates by 29.8% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
AGNC Investment (NASDAQ:AGNC)
Born during the 2008 financial crisis when mortgage markets were in turmoil, AGNC Investment (NASDAQ:AGNC) is a real estate investment trust that primarily invests in mortgage-backed securities guaranteed by U.S. government agencies or enterprises.
AGNC Investment reported revenues of -$112 million, down 367% year on year. This print fell short of analysts’ expectations by 141%. Overall, it was a disappointing quarter for the company with a significant miss of analysts’ net interest income and EPS estimates.
AGNC Investment delivered the slowest revenue growth of the whole group. Interestingly, the stock is up 1.5% since reporting and currently trades at $9.37.
Read our full report on AGNC Investment here, it’s free.
Best Q2: Ellington Financial (NYSE:EFC)
Operating under the guidance of Ellington Management Group, a respected name in structured credit markets, Ellington Financial (NYSE:EFC) acquires and manages a diverse portfolio of mortgage-related, consumer-related, and other financial assets to generate returns for investors.
Ellington Financial reported revenues of $92.54 million, up 1.5% year on year, outperforming analysts’ expectations by 11.5%. The business had a stunning quarter with an impressive beat of analysts’ tangible book value per share estimates and a solid beat of analysts’ EPS estimates.
The market seems content with the results as the stock is up 3.9% since reporting. It currently trades at $13.17.
Is now the time to buy Ellington Financial? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Franklin BSP Realty Trust (NYSE:FBRT)
Operating as a specialized real estate investment trust (REIT) with roots dating back to 2012, Franklin BSP Realty Trust (NYSE:FBRT) originates and manages a diversified portfolio of commercial real estate debt investments secured by properties in the United States and abroad.
Franklin BSP Realty Trust reported revenues of $50.78 million, up 171% year on year, falling short of analysts’ expectations by 8.9%. It was a disappointing quarter as it posted a significant miss of analysts’ net interest income estimates and a significant miss of analysts’ EPS estimates.
Interestingly, the stock is up 9.2% since the results and currently trades at $11.02.
Read our full analysis of Franklin BSP Realty Trust’s results here.
Flagstar Financial (NYSE:FLG)
Tracing its roots back to 1859 and rebranded from New York Community Bancorp in 2024, Flagstar Financial (NYSE:FLG) is a bank holding company that offers commercial and consumer banking services, with specialties in multi-family lending, mortgage originations, and warehouse lending.
Flagstar Financial reported revenues of $496 million, down 26.1% year on year. This result lagged analysts' expectations by 4.6%. It was a disappointing quarter as it also recorded a significant miss of analysts’ net interest income estimates and a miss of analysts’ EPS estimates.
The stock is down 4.4% since reporting and currently trades at $11.50.
Read our full, actionable report on Flagstar Financial here, it’s free.
PennyMac Mortgage Investment Trust (NYSE:PMT)
Operating as a real estate investment trust since 2009 to maintain tax advantages, PennyMac Mortgage Investment Trust (NYSE:PMT) is a specialty finance company that invests in mortgage-related assets and operates a correspondent lending business.
PennyMac Mortgage Investment Trust reported revenues of $70.2 million, down 1.4% year on year. This print came in 26.1% below analysts' expectations. Overall, it was a softer quarter as it also logged a significant miss of analysts’ EPS estimates and a miss of analysts’ tangible book value per share estimates.
The stock is down 5.5% since reporting and currently trades at $11.99.
Read our full, actionable report on PennyMac Mortgage Investment Trust here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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