AGNC Investment (AGNC)

Mortgage REIT AGNC Investment (NASDAQ:AGNC) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 122% year on year to $836 million. Its GAAP profit of $0.72 per share was 31.5% above analysts’ consensus estimates.

Company Overview

Born during the 2008 financial crisis when mortgage markets were in turmoil, AGNC Investment (NASDAQ:AGNC) is a real estate investment trust that primarily invests in mortgage-backed securities guaranteed by U.S. government agencies or enterprises.

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.

AGNC Investment's main competitors include other mortgage REITs such as Annaly Capital Management (NYSE:NLY), Two Harbors Investment Corp. (NYSE:TWO), and ARMOUR Residential REIT (NYSE:ARR), all of which similarly focus on investing in mortgage-backed securities.

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions. AGNC Investment’s demand was weak over the last five years as its revenue fell at a 51.9% annual rate. This wasn’t a great result and suggests it’s a lower quality business.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. AGNC Investment’s recent performance shows its demand remained suppressed as its revenue has declined by 78.2% 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, AGNC Investment reported magnificent year-on-year revenue growth of 122%, and its $836 million of revenue beat Wall Street’s estimates by 42.3%.

Net interest income made up -429% of the company’s total revenue during the last five years, meaning AGNC Investment is well diversified and has a variety of income streams driving its overall growth. Nevertheless, net interest income is critical to analyze for banks because they’re considered a higher-quality, more recurring revenue source by investors.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

AGNC Investment’s full-year EPS flipped from negative to positive over the last five years. This is encouraging and shows it’s at a critical moment in its life.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

AGNC Investment’s EPS grew at an astounding 34.6% compounded annual growth rate over the last two years, higher than its 78.2% annualized revenue declines. This tells us management adapted its cost structure in response to a challenging demand environment.

In Q3, AGNC Investment reported EPS of $0.72, up from $0.39 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects AGNC Investment’s full-year EPS of $0.67 to grow 129%.

Banks are balance sheet-driven businesses because they generate earnings primarily through borrowing and lending. They’re also valued based on their balance sheet strength and ability to compound book value (another name for shareholders’ equity) over time.

This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. EPS can become murky due to acquisition impacts or accounting flexibility around loan provisions, and TBVPS resists financial engineering manipulation.

AGNC Investment’s TBVPS declined at a 12.3% annual clip over the last five years. TBVPS has stabilized recently as it was flat over the last two years at about $8.28 per share.

Over the next 12 months, Consensus estimates call for AGNC Investment’s TBVPS to shrink by 2.9% to $8.04, a sour projection.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, AGNC Investment has averaged an ROE of 2.8%, uninspiring for a company operating in a sector where the average shakes out around 7.5%.

It was good to see AGNC Investment 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 mixed quarter. The stock remained flat at $10.07 immediately after reporting.

Updated: December 4, 2025 at 11:43 PM EST

Before investing in or passing on AGNC Investment, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

AGNC Investment doesn’t pass our quality test. To kick things off, its revenue has declined over the last five years. And while its net interest income growth was exceptional over the last five years, the downside is its TBVPS has declined over the last five years. On top of that, its declining EPS over the last five years makes it a less attractive asset to the public markets.

AGNC Investment’s P/B ratio based on the next 12 months is 1.1x. This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $10.16 on the company (compared to the current share price of $10.48), implying they don’t see much short-term potential in AGNC Investment.