Let’s dig into the relative performance of Ladder Capital (NYSE: LADR) and its peers as we unravel the now-completed Q2 thrifts & mortgage finance earnings season.

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 20 thrifts & mortgage finance stocks we track reported a slower Q2. As a group, revenues missed analysts’ consensus estimates by 26% while next quarter’s revenue guidance was in line.

Luckily, thrifts & mortgage finance stocks have performed well with share prices up 10.1% on average since the latest earnings results.

Ladder Capital (NYSE: LADR)

Founded during the 2008 financial crisis when traditional lenders retreated from commercial real estate, Ladder Capital (NYSE: LADR) is a real estate investment trust that originates commercial real estate loans, owns commercial properties, and invests in real estate securities.

Ladder Capital reported revenues of $56.3 million, down 21.4% year on year. This print was in line with analysts’ expectations, but overall, it was a softer quarter for the company with a significant miss of analysts’ tangible book value per share estimates and a significant miss of analysts’ net interest income estimates.

“We are very pleased to achieve investment grade status and complete our inaugural unsecured bond offering in the investment grade market,” said Brian Harris, Ladder’s Chief Executive Officer.

Interestingly, the stock is up 5.9% since reporting and currently trades at $11.76.

Read our full report on Ladder Capital 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 a solid beat of analysts’ tangible book value per share estimates and a beat of analysts’ EPS estimates.

The market seems happy with the results as the stock is up 8.7% since reporting. It currently trades at $13.77.

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 15.6% since the results and currently trades at $11.66.

Read our full analysis of Franklin BSP Realty Trust’s results here.

TFS Financial (NASDAQ: TFSL)

Tracing its roots back to 1938 during the Great Depression era when savings and loans were vital to homeownership, TFS Financial (NASDAQ: TFSL) is a savings and loan holding company that provides mortgage lending, deposit services, and other retail banking products primarily in Ohio and Florida.

TFS Financial reported revenues of $80.54 million, up 6% year on year. This print missed analysts’ expectations by 0.8%. It was a slower quarter as it also logged EPS in line with analysts’ estimates.

The stock is up 8.7% since reporting and currently trades at $13.72.

Read our full, actionable report on TFS Financial here, it’s free.

Annaly Capital Management (NYSE: NLY)

Operating as a real estate investment trust since 1996 with a focus on generating income from interest rate spreads, Annaly Capital Management (NYSE: NLY) is a diversified capital manager that invests in agency mortgage-backed securities, residential mortgage loans, and mortgage servicing rights.

Annaly Capital Management reported revenues of $110.8 million, up 131% year on year. This result lagged analysts' expectations by 74.2%. Overall, it was a softer quarter as it also produced a significant miss of analysts’ net interest income estimates and a narrow beat of analysts’ EPS estimates.

The stock is up 8.3% since reporting and currently trades at $22.15.

Read our full, actionable report on Annaly Capital Management here, it’s free.

Market Update

In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.

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