NLY

We rate ANNALY CAPITAL MANAGEMENT INC (NLY) as a Reduce with a composite score of 43.2/100 at a current price of $23.02. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in stability (70th percentile) and momentum (61th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (23th percentile) and quality (25th percentile) tempers our overall conviction. We assign a No Moat rating (29/100), High uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

ANNALY CAPITAL MANAGEMENT INC holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 43.2/100 places it at rank #3084 in our full 7,333-stock universe. With a $13.0B market capitalization, ANNALY CAPITAL MANAGEMENT INC operates at meaningful scale within the Finance, Insurance, And Real Estate sector, providing competitive advantages in distribution, procurement, and customer reach.

The near-term outlook is constructive, with revenue growing at 415% and momentum in the 61th percentile confirming positive market sentiment and institutional accumulation. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy. Investment factor at the 23th percentile indicates reinvestment patterns that investors should monitor for sustainability.

The margin cascade tells an important story: gross margins of 0% (-76.5pp vs sector) narrow to operating margins of 239% (+222.2pp vs sector) and net margins of 250.4%, yielding a gross-to-net conversion rate of N/A%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $23.02, ANNALY CAPITAL MANAGEMENT INC is trading at a premium to fundamental value. Our value factor score of 34/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 14.8x (a 24% premium to the sector median of 11.9x), EV/EBITDA of 14.9x (at a premium), P/B of 1.0x, P/S of 21.1x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a High uncertainty rating to ANNALY CAPITAL MANAGEMENT INC. Key risk factors include significant leverage (739% debt-to-equity), weak quality scores (25th percentile), low beta of 0.66 — while defensive, this may indicate limited upside participation in bull markets. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (739% debt-to-equity); weak quality scores (25th percentile); low beta of 0.66 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 70th percentile and quality factor at the 25th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (70th percentile) suggests predictable business dynamics; a 13.61% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate ANNALY CAPITAL MANAGEMENT INC's capital allocation as Poor. Key concerns include elevated leverage (739% D/E), weak asset returns (ROA 0.8%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — ANNALY CAPITAL MANAGEMENT INC significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, ANNALY CAPITAL MANAGEMENT INC receives a Reduce rating with a composite score of 43.2/100 (rank #3084 of 7,333). Our quantitative framework assigns a No Moat (29/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 43/100.

Our analysis does not support a constructive view on ANNALY CAPITAL MANAGEMENT INC at this time. The combination of limited competitive advantages, high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.