Dynex Capital (NYSE:DX) Posts Quarterly Earnings Results, Misses Estimates By $0.01 EPS

Dynex Capital (NYSE:DX) announced its quarterly earnings data on Monday. The real estate investment trust reported $0.38 EPS for the quarter, missing the consensus estimate of $0.39 by ($0.01), Zacks reports. The business had revenue of $101.56 million during the quarter, compared to analysts’ expectations of $113.48 million. Dynex Capital had a negative net margin of 4.65% and a positive return on equity of 10.45%.

Here are the key takeaways from Dynex Capital’s conference call:

• Book value fell sharply: Book value per common share declined 15.4% to $10.91 in the third quarter, producing a negative total economic return of approximately 11.5% as Treasury yields rose above 5% and Agency MBS spreads widened.
• Liquidity and financing remained robust: Dynex ended the quarter with $1.3 billion of cash and unencumbered securities, more than $24 billion of repo financing across over 25 counterparties, and said funding markets remained deep and resilient through the volatility.
• Management sees an attractive forward opportunity: Wider mortgage spreads, limited refinancing incentives, and substantially improved convexity have reduced cash-flow uncertainty; management estimates static levered ROEs of roughly 20% for lower coupons and up to 25% for current coupons.
• Capital flexibility increased: The company raised $384 million during the quarter, including $116 million through its first preferred equity offering since 2020, which increased preferred equity to about 7% of total equity and diversified its funding base.
• Risk positioning favors spread exposure: Dynex maintained its positions rather than deleveraging, increased spread sensitivity to about 5.7% of common equity per 10 basis points, and ended at 9.0x leverage while adding hedges as rates rose.

Dynex Capital Stock Up 3.5%

Shares of DX opened at $10.93 on Wednesday. The stock has a market capitalization of $2.70 billion, a price-to-earnings ratio of 8.31 and a beta of 0.98. Dynex Capital has a 1 year low of $10.31 and a 1 year high of $14.93. The business’s 50 day simple moving average is $12.07 and its 200-day simple moving average is $12.73. The company has a debt-to-equity ratio of 0.01, a current ratio of 1.16 and a quick ratio of 1.16.

Dynex Capital Dividend Announcement

The company also recently disclosed a monthly dividend, which will be paid on Monday, November 2nd. Stockholders of record on Thursday, October 22nd will be issued a dividend of $0.17 per share. This represents a $2.04 annualized dividend and a dividend yield of 18.7%. The ex-dividend date of this dividend is Thursday, October 22nd. Dynex Capital’s dividend payout ratio is 77.57%.

Wall Street Analysts Forecast Growth

Several research firms recently issued reports on DX. Weiss Ratings cut Dynex Capital from a “hold (c-)” rating to a “sell (d+)” rating in a research report on Friday. Keefe, Bruyette & Woods reissued an “outperform” rating on shares of Dynex Capital in a research note on Tuesday. JonesTrading lowered their price target on Dynex Capital from $14.75 to $12.50 and set a “buy” rating on the stock in a report on Monday. Finally, BTIG Research set a $12.00 price target on Dynex Capital and gave the stock a “buy” rating in a report on Tuesday, October 6th. Three equities research analysts have rated the stock with a Buy rating, one has assigned a Hold rating and one has issued a Sell rating to the stock. Based on data from MarketBeat, Dynex Capital has an average rating of “Hold” and an average target price of $13.38.

Key Headlines Impacting Dynex Capital

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

• Positive Sentiment: CEO Smriti Popenoe purchased 12,000 shares for approximately $156,600, while CFO Michael Sartori bought 1,000 shares for $10,700. The insider purchases increase their respective holdings and may signal management’s confidence that the stock is undervalued. CEO insider purchase filing CFO insider purchase filing
• Positive Sentiment: Management said stable funding and limited refinancing needs are allowing Dynex to earn attractive spreads without relying on near-term interest-rate cuts. The company also believes wider mortgage-backed securities spreads could create better future investment opportunities. Dynex Capital earnings call highlights
• Neutral Sentiment: JonesTrading lowered its price target from $14.75 to $12.50 but maintained a “buy” rating, implying analysts still see potential upside despite the weaker quarter. JonesTrading price target update
• Negative Sentiment: Third-quarter results were disappointing: Dynex reported a $335.5 million net loss, or $1.34 per share, and book value per share fell to $10.91 from $12.90. Wider Agency MBS spreads reduced portfolio values, producing a negative economic return of $1.48 per share. EPS of $0.38 also narrowly missed estimates, while revenue of $101.6 million fell short of the $113.5 million consensus. Leverage increased to 9.0 times equity, adding risk. Dynex Capital third-quarter results

Insider Buying and Selling

In other Dynex Capital news, CEO Smriti Popenoe purchased 12,000 shares of Dynex Capital stock in a transaction that occurred on Tuesday, October 20th. The shares were bought at an average price of $13.05 per share, for a total transaction of $156,600.00. Following the completion of the transaction, the chief executive officer owned 541,098 shares of the company’s stock, valued at approximately $7,061,328.90. This trade represents a 2.27% increase in their position. The acquisition was disclosed in a legal filing with the SEC, which is available through the SEC website. Also, CIO Terrence John Connelly, Jr. purchased 2,500 shares of the firm’s stock in a transaction that occurred on Friday, September 25th. The shares were acquired at an average cost of $11.18 per share, for a total transaction of $27,950.00. Following the purchase, the executive owned 58,695 shares of the company’s stock, valued at $656,210.10. This represents a 4.45% increase in their ownership of the stock. The disclosure for this purchase is available in the SEC filing. Insiders have bought a total of 15,500 shares of company stock valued at $195,250 over the last quarter. Corporate insiders own 0.76% of the company’s stock.

About Dynex Capital

Dynex Capital, Inc (NYSE: DX) is an internally managed real estate investment trust that invests in mortgage-related assets. The company primarily focuses on agency mortgage-backed securities, including securities backed by the U.S. government or government-sponsored enterprises, as well as selected non-agency residential and commercial mortgage-backed securities.

Dynex Capital uses financing and other investment strategies to generate income from its portfolio of mortgage assets. Its investments are tied primarily to the U.S.