Mortgage finance REIT Annaly Capital Management (NYSE: NLY) beat Wall Street’s revenue expectations in Q4 CY2025, with sales up 74.8% year on year to $921.8 million. Its GAAP profit of $1.40 per share was 66.7% above analysts’ consensus estimates.

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Company Overview

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.

Sales Growth

In general, banks make money from two primary sources. The first is net interest income, which is interest earned on loans, mortgages, and investments in securities minus interest paid out on deposits. The second source is non-interest income, which can come from bank account, credit card, wealth management, investing banking, and trading fees. Annaly Capital Management’s demand was weak over the last five years as its revenue fell at a 12.9% annual rate. This wasn’t a great result and suggests it’s a low quality business.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Annaly Capital Management’s recent performance shows its demand remained suppressed as its revenue has declined by 46% annually over the last two years. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Annaly Capital Management reported magnificent year-on-year revenue growth of 74.8%, and its $921.8 million of revenue beat Wall Street’s estimates by 26.3%.

Net interest income made up 69.8% of the company’s total revenue during the last five years, meaning lending operations are Annaly Capital Management’s largest source of revenue.

Markets consistently prioritize net interest income growth over fee-based revenue, recognizing its superior quality and recurring nature compared to the more unpredictable non-interest income streams.

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Tangible Book Value Per Share (TBVPS)

Banks operate as balance sheet businesses, with profits generated through borrowing and lending activities. Valuations reflect this reality, emphasizing balance sheet strength and long-term book value compounding ability.

This is why we consider tangible book value per share (TBVPS) the most important metric to track for banks. TBVPS represents the real, liquid net worth per share of a bank, excluding intangible assets that have debatable value upon liquidation. On the other hand, EPS is often distorted by mergers and flexible loan loss accounting. TBVPS provides clearer performance insights.

Annaly Capital Management’s TBVPS declined at a 10.6% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 2% annually over the last two years from $19.41 to $20.21 per share.

Over the next 12 months, Consensus estimates call for Annaly Capital Management’s TBVPS to remain flat at roughly $20.33, a disappointing projection.

Key Takeaways from Annaly Capital Management’s Q4 Results

It was good to see Annaly Capital Management beat analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. On the other hand, its net interest income missed. Overall, we think this was a solid quarter with some key areas of upside. The stock remained flat at $24.38 immediately following the results.

Indeed, Annaly Capital Management had a rock-solid quarterly earnings result, but is this stock a good investment here? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).