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Should Value Investors Buy Annaly Capital Management (NLY) Stock?

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is Annaly Capital Management (NLY). NLY is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 8.71 right now. For comparison, its industry sports an average P/E of 9.04. NLY's Forward P/E has been as high as 9.34 and as low as 8.23, with a median of 8.88, all within the past year.

Another notable valuation metric for NLY is its P/B ratio of 1.17. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. NLY's current P/B looks attractive when compared to its industry's average P/B of 1.27. Over the past 12 months, NLY's P/B has been as high as 1.19 and as low as 0.90, with a median of 0.99.

Finally, investors should note that NLY has a P/CF ratio of 16.62. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. NLY's P/CF compares to its industry's average P/CF of 23.93. Over the past 52 weeks, NLY's P/CF has been as high as 16.86 and as low as 2.61, with a median of 3.65.

Value investors will likely look at more than just these metrics, but the above data helps show that Annaly Capital Management is likely undervalued currently. And when considering the strength of its earnings outlook, NLY sticks out at as one of the market's strongest value stocks.


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