AGNC Investment Posts 2.6% Gain Since Last Earnings Report, Can Momentum Continue?

AGNC Investment's Q2 2025 net spread and dollar roll income per common share missed estimates at 38 cents, down from 53 cents YoY. The company reported a comprehensive loss per common share of 13 cents, flat from the year-ago quarter. Net interest income was $162 million, and the average asset yield on the portfolio was 4.87%, up from 4.69% in Q2 2024. Tangible net book value per share declined 7% YoY to $7.81.

AGNC Investment Corp. (NASDAQ: AGNC) reported its Q2 2025 financial results, which showed a net spread and dollar roll income per common share of 38 cents, down from 53 cents year-over-year (YoY). The company also reported a comprehensive loss per common share of 13 cents, which was flat compared to the year-ago quarter. Net interest income was $162 million, and the average asset yield on the portfolio increased to 4.87%, up from 4.69% in Q2 2024. Tangible net book value per share declined 7% YoY to $7.81 [1].

The company's results were impacted by the challenging mortgage-backed security (MBS) market environment, which continued to be influenced by ongoing tariff issues, tensions between President Donald Trump and Federal Reserve Chair Jerome Powell, and geopolitical risks [1]. Despite these challenges, AGNC remains optimistic about the future, expecting banks and foreign investors to return to the MBS market, which could help narrow the current wide MBS spread [1].

AGNC's tangible book value (TBV) fell by 5% or $0.44 per share, reaching $7.81 at the end of Q2, down from $8.25 at the end of Q1. The company's average net interest spread narrowed to 2.01%, compared to 2.69% a year ago and 2.12% in the first quarter of 2025. The narrower spread reflects the lessening benefits of its hedges and higher hedge costs [1].

AGNC's equity raise of $800 million through its at-the-market (ATM) program at a significant premium to its TBV was a positive development, as it increased the company's TBV and provided it with the capital to invest in MBSes [1]. The company expects its net spread and dollar roll income to stay in the mid- to high-$0.30 to the low- to mid-$0.40 range, which should help support its dividend payments [1].

However, for the stock to really work, AGNC needs to see its TBV rally. The Fed's reluctance to lower interest rates at the moment poses a challenge, but the biggest TBV catalyst for the mREIT would be tighter MBS spreads [1]. MBS spreads near historical highs suggest that risk-tolerant, income-oriented investors can buy the stock at current levels, with further TBV downside appearing limited [1].

References:
[1] https://www.aol.com/agnc-investment-another-tough-quarter-221000888.html