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Since I always seem to put myself out on a limb, why stop now when my favorite mREIT is about to report its quarterly earnings. Today, after the close of trading, Annaly Capital Management, Inc. (NYSE:NLY) will report its second quarter results.

Click to enlarge

Annaly Capital Management, Inc. (<a href='' title='Annaly Capital Management, Inc.'>NLY</a>)

With plenty of analysts following Annaly, there is a rather wide range of numbers so let's take a peek, and add my opinions:

  • Earnings Per Share: Low: $.43, High: $.56, Consensus: $.49
  • My Estimate: $.53
  • Revenue Estimates: Low: $475 million, High: $580 million, Consensus: $528 million
  • My Estimate: $550 million

These numbers are still behind last year same quarter and many will continue to argue that Annaly is failing to produce. I realize these are just basic numbers when making an evaluation of an earnings report, however these are the most important right now.

I also believe that I could be conservative with my estimates and we could be in for a really big surprise this time around.

Some Fast Facts

Let me cut to the chase with some of the facts could support my opinion, aside from the really pretty three-month chart above:

  • The share price has been on a significant run up along with all of the mREITs in this sector (See the chart above).
  • Insiders have converted virtually all of their options since last quarter, into shares, not cash.
  • The interest rate environment has been stable, thanks to the Fed.
  • The ongoing ZIRP (zero interest rate policy) allows all mREITs to maintain profits.
  • There have been less pre payments even with lower mortgage rates.
  • Annaly has not issued a secondary stock offering as yet and it has 125 million shares on the "shelf"
  • Annaly has maintained its current dividend during less "stable" quarters.

I am not naive to believe that my crystal ball is any better than any of the "pro's" out there, but I also do not think it is much worse. Yes, I am an optimist. The mREITs have been on a tear. Money has been flowing into them all, with the likes of American Capital Agency Corp. (NASDAQ:AGNC) also having a wonderful run, but using more leverage than Annaly. I think I will be more right than wrong.

The Bottom Line

The biggest fact for me has been all of the insider buying and not one share has been sold. To me that is a pretty darn good indicator that "things" are pretty good.

If I am right, Annaly shareholders could see a nice pop both in the share price as well as the dividends next time. The dividends are why we own these stocks anyway, but I am beginning to think that NLY could go over $20.00/share, sooner than later.

Disclosure: I am long NLY.