Dynex Capital (NYSE:DX) Reaches New 1-Year Low After Earnings Miss

Key Points

• Dynex Capital shares fell to a new 52-week low, trading as low as $10.31 after the mortgage REIT reported adjusted EPS of $0.38, below the $0.39 consensus, and revenue of $101.56 million versus expectations of $113.48 million.
• The company declared a monthly dividend of $0.17 per share, equivalent to $2.04 annually and a 19.3% dividend yield; its payout ratio is 77.57%.
• Analyst sentiment remains mixed: the consensus rating is “Hold” with a $13.38 target price, while JonesTrading maintained a “Buy” rating but cut its target to $12.50. Wider mortgage-backed securities spreads also reduced book value per share to $10.91 from $12.90.

Dynex Capital, Inc. (NYSE:DX - Get Free Report)'s stock price reached a new 52-week low on Tuesday after the company announced weaker than expected quarterly earnings. The stock traded as low as $10.31 and last traded at $10.5710, with a volume of 11,729,819 shares traded. The stock had previously closed at $10.93.

The real estate investment trust reported $0.38 EPS for the quarter, missing the consensus estimate of $0.39 by ($0.01). Dynex Capital had a net margin of 49.18% and a return on equity of 8.85%. The company had revenue of $101.56 million during the quarter, compared to analysts' expectations of $113.48 million.

Dynex Capital Announces Dividend

The firm also recently announced a monthly dividend, which will be paid on Monday, November 2nd. Stockholders of record on Thursday, October 22nd will be given a dividend of $0.17 per share. This represents a $2.04 dividend on an annualized basis and a dividend yield of 19.3%. The ex-dividend date of this dividend is Thursday, October 22nd. Dynex Capital's payout ratio is presently 77.57%.

Trending Headlines about Dynex Capital

Here are the key news stories impacting Dynex Capital this week:

• Positive Sentiment: JonesTrading maintained a “buy” rating while lowering its price target to $12.50 from $14.75, implying approximately 18% potential upside from the referenced price. JonesTrading lowers Dynex Capital price target
• Positive Sentiment: Dynex reported net interest income of $101.6 million, up from $93.8 million in the prior quarter. Stable funding and limited refinancing needs enabled the mortgage REIT to maintain attractive investment spreads without relying on near-term interest-rate cuts. Dynex long-term investor takeaways
• Positive Sentiment: The company raised $384 million of capital, expanded its Agency mortgage-backed securities portfolio to $28.3 billion, and maintained substantial liquidity of $1.3 billion. It also declared a $0.51-per-share dividend. Dynex third-quarter results details
• Neutral Sentiment: Portfolio growth came with higher risk: leverage including to-be-announced securities increased to 9.0 times shareholders’ equity from 8.1 times.
• Negative Sentiment: Dynex posted a $335.5 million third-quarter net loss, or $1.34 per share, while adjusted EPS of $0.38 missed the $0.39 consensus estimate. Dynex third-quarter loss and earnings miss
• Negative Sentiment: Wider Agency MBS spreads reduced portfolio fair values, pushing book value per share down to $10.91 from $12.90 in the previous quarter. Total economic return was negative $1.48 per share, or negative 11.5% of beginning book value. Dynex book value and net interest income report

Wall Street Analyst Weigh In

A number of research analysts recently commented on the company. BTIG Research set a $12.00 price target on Dynex Capital and gave the company a "buy" rating in a report on Tuesday, October 6th. Keefe, Bruyette & Woods restated an "outperform" rating on shares of Dynex Capital in a report on Tuesday, July 21st. JonesTrading cut their target price on Dynex Capital from $14.75 to $12.50 and set a "buy" rating on the stock in a research report on Monday. Finally, Weiss Ratings lowered Dynex Capital from a "hold (c-)" rating to a "sell (d+)" rating in a research report on Friday. Three research analysts have rated the stock with a Buy rating, one has given a Hold rating and one has issued a Sell rating to the company. According to MarketBeat.com, Dynex Capital currently has an average rating of "Hold" and a consensus target price of $13.38.

Insider Buying and Selling at Dynex Capital

In other news, CIO John Jr acquired 2,500 shares of the business's stock in a transaction that occurred on Friday, September 25th. The shares were purchased at an average cost of $11.18 per share, for a total transaction of $27,950.00. Following the transaction, the executive directly owned 58,695 shares in the company, valued at $656,210.10. This trade represents a 4.45% increase in their position. The acquisition was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through this link. 0.76% of the stock is currently owned by company insiders.

Institutional Inflows and Outflows

A number of hedge funds and other institutional investors have recently bought and sold shares of DX. BlackRock Inc. increased its holdings in Dynex Capital by 14.6% during the second quarter. BlackRock Inc. now owns 18,437,985 shares of the real estate investment trust's stock worth $241,722,000 after buying an additional 2,355,906 shares during the last quarter. State Street Corp raised its position in Dynex Capital by 12.8% during the second quarter. State Street Corp now owns 5,113,743 shares of the real estate investment trust's stock worth $67,862,000 after acquiring an additional 579,022 shares in the last quarter. Wellington Management Group LLP raised its position in Dynex Capital by 142.9% during the second quarter. Wellington Management Group LLP now owns 2,221,800 shares of the real estate investment trust's stock worth $29,128,000 after acquiring an additional 1,307,100 shares in the last quarter. Callodine Capital Management LP acquired a new stake in Dynex Capital in the first quarter valued at $21,320,000. Finally, Segall Bryant & Hamill LLC acquired a new stake in Dynex Capital in the first quarter valued at $19,581,000. 38.34% of the stock is owned by institutional investors and hedge funds.

Dynex Capital Trading Down 3.3%

The business's 50 day simple moving average is $12.11 and its 200 day simple moving average is $12.74. The stock has a market cap of $2.62 billion, a price-to-earnings ratio of 9.59 and a beta of 0.98. The company has a quick ratio of 1.16, a current ratio of 1.16 and a debt-to-equity ratio of 0.01.

About Dynex Capital

Dynex Capital, Inc NYSE: DX is a mortgage real estate investment trust that invests in mortgage-related assets. Its portfolio primarily consists of agency mortgage-backed securities, including securities backed by residential and commercial mortgages, as well as other mortgage assets.

The company uses financing arrangements, including repurchase agreements, to support its investment activities and seeks to generate income from the spread between the returns on its investments and its financing and operating costs.

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