The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Annaly Capital Management (NYSE: NLY) and the rest of the thrifts & mortgage finance stocks fared in Q2.

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.

Thankfully, share prices of the companies have been resilient as they are up 8.5% on average since the latest earnings results.

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 print fell short of analysts’ expectations by 74.2%. Overall, it was a softer quarter for the company with a significant miss of analysts’ net interest income estimates and a narrow beat of analysts’ EPS estimates.

"Despite significant intra-quarter volatility across financial markets, Annaly delivered its seventh consecutive quarter with a positive economic return, underscoring the benefits of holding our Agency, Residential Credit and MSR strategies together on balance sheet," stated Chief Executive Officer & Co-Chief Investment Officer David Finkelstein.

Interestingly, the stock is up 6.7% since reporting and currently trades at $21.82.

Read our full report on Annaly Capital Management 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 and EPS estimates.

The market seems happy with the results as the stock is up 8.5% since reporting. It currently trades at $13.75.

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 16% since the results and currently trades at $11.70.

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 result missed analysts’ expectations by 0.8%. It was a slower quarter as it also produced EPS in line with analysts’ estimates.

The stock is up 7.9% since reporting and currently trades at $13.62.

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

Northwest Bancshares (NASDAQ: NWBI)

Founded in 1896 and operating across Pennsylvania, New York, Ohio, and Indiana, Northwest Bancshares (NASDAQ: NWBI) is a bank holding company that operates Northwest Bank, providing personal and business banking, investment management, and trust services.

Northwest Bancshares reported revenues of $150.4 million, up 53.5% year on year. This print surpassed analysts’ expectations by 1.6%. Taking a step back, it was a satisfactory quarter as it also recorded a narrow beat of analysts’ net interest income estimates but tangible book value per share in line with analysts’ estimates.

The stock is up 4.1% since reporting and currently trades at $12.85.

Read our full, actionable report on Northwest Bancshares here, it’s free.

Market Update

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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