Angel Oak Mortgage REIT (NYSE:AOMR) Posts Earnings Results, Beats Expectations By $0.02 EPS

Key Points

• Angel Oak Mortgage REIT beat quarterly earnings expectations, reporting EPS of $0.35 versus the $0.33 consensus estimate. Distributable earnings rose to $9.0 million from $2.6 million a year earlier, while net interest income increased 8% to $10.7 million.
• Management improved the company’s financial position by repurchasing $15 million of common equity, reducing warehouse-facility costs by 35 basis points, and lowering recourse debt-to-equity to approximately 1.0 times after two securitizations.
• GAAP book value per share declined 1.7% to $10.13, though economic book value was down only 0.3%; the company declared a $0.32-per-share dividend. Analysts maintain a consensus “Hold” rating with a $10.08 price target.

Angel Oak Mortgage REIT (NYSE:AOMR - Get Free Report) announced its quarterly earnings results on Tuesday. The company reported $0.35 EPS for the quarter, beating analysts' consensus estimates of $0.33 by $0.02, Zacks reports. Angel Oak Mortgage REIT had a return on equity of 5.25% and a net margin of 10.64%.

Here are the key takeaways from Angel Oak Mortgage REIT's conference call:

• Distributable earnings rose to $9.0 million from $2.6 million a year ago, while net interest income increased 8% year over year to $10.7 million and interest income grew 18% to $41.4 million.
• Management repurchased $15 million of common equity at accretive return levels and negotiated a 35-basis-point reduction in the spread on its largest warehouse facility, actions expected to improve future returns.
• Following two post-quarter securitizations, recourse debt-to-equity declined from 2.3 times to approximately 1.0 times, while the company retained about $900 million of undrawn financing capacity and plans to maintain roughly four non-QM securitizations annually.
• GAAP book value per share fell 1.7% to $10.13, primarily due to unrealized portfolio and derivative losses, although economic book value declined only 0.3% and management said book value has remained relatively flat since quarter-end; the company declared a $0.32 per-share dividend.
• Angel Oak plans to keep HELOCs as a selective 10%–15% allocation of the portfolio, citing attractive returns but emphasizing cautious underwriting amid weaker broader consumer credit and potential increases in prepayment speeds as mortgage rates decline.

Angel Oak Mortgage REIT Stock Up 0.8%

Shares of Angel Oak Mortgage REIT stock traded up $0.07 during trading on Tuesday, reaching $8.85. 39,165 shares of the company traded hands, compared to its average volume of 106,220. The firm has a market capitalization of $220.49 million, a PE ratio of 13.83 and a beta of 1.25. Angel Oak Mortgage REIT has a 1-year low of $7.95 and a 1-year high of $10.14. The company has a 50 day moving average price of $8.70 and a 200-day moving average price of $8.70. The company has a debt-to-equity ratio of 8.44, a current ratio of 13.09 and a quick ratio of 13.09.

Hedge Funds Weigh In On Angel Oak Mortgage REIT

Several institutional investors have recently made changes to their positions in AOMR. Strs Ohio bought a new stake in Angel Oak Mortgage REIT in the 1st quarter valued at about $25,000. Kemnay Advisory Services Inc. bought a new position in Angel Oak Mortgage REIT in the fourth quarter worth approximately $26,000. BNP Paribas Financial Markets boosted its holdings in Angel Oak Mortgage REIT by 343.0% in the second quarter. BNP Paribas Financial Markets now owns 3,929 shares of the company's stock worth $37,000 after acquiring an additional 3,042 shares in the last quarter. Marshall Wace LLP acquired a new stake in Angel Oak Mortgage REIT in the fourth quarter valued at approximately $87,000. Finally, Public Employees Retirement System of Ohio acquired a new stake in Angel Oak Mortgage REIT in the third quarter valued at approximately $88,000. Institutional investors and hedge funds own 80.15% of the company's stock.

Analyst Upgrades and Downgrades

AOMR has been the subject of a number of research reports. BTIG Research dropped their price objective on shares of Angel Oak Mortgage REIT from $13.50 to $10.00 and set a "buy" rating for the company in a report on Wednesday, June 17th. Weiss Ratings cut shares of Angel Oak Mortgage REIT from a "hold (c)" rating to a "sell (d+)" rating in a research report on Friday, May 15th. Two investment analysts have rated the stock with a Buy rating, two have issued a Hold rating and one has given a Sell rating to the company. According to data from MarketBeat, Angel Oak Mortgage REIT presently has a consensus rating of "Hold" and a consensus target price of $10.08.

Angel Oak Mortgage REIT Company Profile

Angel Oak Mortgage REIT, Inc NYSE: AOMR is a real estate investment trust that specializes in a diversified portfolio of residential mortgage assets. The company primarily invests in non-agency residential mortgage-backed securities (RMBS), residential whole loans and credit risk transfer securities issued by government-sponsored enterprises. By focusing on these structured credit instruments, Angel Oak Mortgage REIT seeks to generate attractive risk-adjusted returns through a combination of net interest income and potential capital appreciation.

The firm employs leverage through repurchase financing facilities and actively manages duration and credit exposure to adapt to changing market conditions.

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