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What\'s in the Offing for Two Harbors (TWO) in Q1 Earnings?

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Update time : 2020-05-29 10:51:14

Two Harbors Investment Corp. TWO is slated to explain first-quarter 2020 results at can 6, backward fair close. The company’s results will apt reason year-over-year declines at its revenues and heart wage per part (EPS).

In the persist reported quarter, this hybrid mortgage authentic wealth investment faith (mREIT) posted heart EPS of 25 cents, missing the Zacks Consensus tax of 40 cents.

Over the trailing four quarters, the corporation missed the Zacks Consensus tax at three occasions and thrash at the other, the negative astonish being 18.97%, at average. The list beneath depicts this astonish history:

Two Harbors Investments Corp price and EPS Surprise

Two Harbors Investments Corp price-eps-surprise | Two Harbors Investments Corp Quote

Let’s yell on how things possess shaped up foregoing to this announcement.

Factors to Consider

The liquidity-driven fair distress, triggered by the ongoing coronavirus crisis, resulted at important dislocations at the mortgage and faith markets. Specifically, because the economic shock of the pandemic became clear, money preservations and concerns at the failure of parliament mortgage payments resulted at a risk-off manner by investors, who started indiscriminately shedding risky assets. With investors fleeing from residential and commercial debt, the mortgage fair either felt the brunt of the selloff. This resulted at pricing pressures at mortgage backed securities (MBS). because prices of the securities declined, mREITs — which know the securities — experienced a autumn at book values. Impacts of these are expected to acquire reflected at the company’s quarterly results.

Additionally, with few uncertainties at the faith markets, credit-sensitive estate and non-Agency MBS (not backed by Fannie Mae and Freddie Mac) were severely impacted, driving margin calls from repo lenders. to encounter the margin calls and de-lever portfolios, mREITs are expected to possess resorted to asset sales at lower valuations.

In flare of such unprecedented conditions, during the first quarter, asset spreads at Two Harbors’ Agency residential MBS (RMBS) and legacy non-Agency RMBS witnessed material widening, and received margin calls. Hence, at Mar 25, the corporation sold a substantial fraction of its non-agency RMBS portfolio, thereby eliminating farther outsized margin yell exposure at the assets.

As of the same date, the company’s portfolio consisted of $20 million worthy Agency MBS and mortgage servicing rights (MSR) grouped beneath its rates strategy. Further, the corporation announced a 55% reject at its book evaluate from the quit of the zone till Mar 25. This is expected to possess resulted from declining price premiums at its specified pools, lower MBS valuations, and important losses from its derivatives and hedging instruments.

Also, the corporation suspended its first-quarter 2020 general stock and preferred stock dividends to affirm portfolio liquidity.

As the servicer of record because the MSR estate at its portfolio, the corporation has apt faced headwinds at the servicing advances front. Given the mortgage forbearance earnings options at the CARES Act, mortgage servicers are beneath compulsion to wage advances to bond holders to cover delinquent mortgage payments. Hence, Two Harbors has apt faced material servicing promote obligations, with an expected enlarge at delinquencies.

Given these concerns, the company’s revenues are expected to possess declined year at year. at fact, because first-quarter 2020, the Zacks Consensus tax because its revenues is pinned at $39.3 million and suggests a 52% year-over-year slump.

Lastly, foregoing to the first-quarter wage release, the corporation has been witnessing downward tax revisions. because such, the Zacks Consensus tax of EPS because the zone to exist reported has moved about 21% downward to 34 cents at the past month, reflecting analysts’ bearish sentiments. Also, it suggests a year-over-year reject of 30.6%.

Earnings Whispers

Here is what our quantitative xerox predicts:

Two Harbors does no possess the precise blend of two key ingredients — a positive Earnings ESP and Zacks grade #3 (Hold) or higher — because increasing the odds of an wage beat.

You can disclose the best stocks to buy or sell ago they’re reported with our Earnings ESP filter.

Earnings ESP: The wage ESP because Two Harbors is -5.88%.

Zacks Rank: Two Harbors carries a Zacks grade #5 (Strong Sell).

You can see the finish schedule of today’s Zacks #1 grade (Strong Buy) stocks here.

Stocks That justify a Look

Here are a few stocks at the REIT sector that you can expect to consider, because our xerox shows that these possess the precise blend of elements to explain a definite astonish this quarter:

Hannon Armstrong Sustainable Infrastructure Capital, Inc. HASI, scheduled to liberate wage at May7, has an wage ESP of +5.52% and a Zacks grade of 3 at present.

SBA Communications Corporation SBAC, situation to explain quarterly numbers at can 5, currently has an wage ESP of +0.67% and a Zacks grade of 3.

Americold Realty Trust COLD, expected to liberate wage results at can 7, currently has an wage ESP of +9.74% and a Zacks grade #3.

5 Stocks situation to Double

Each was hand-picked by a Zacks expert because the #1 favorite stock to win +100% or more at 2020. each comes from a different sector and has only qualities and catalysts that could fuel special growth.

Most of the stocks at this explain are flying beneath Wall route radar, which provides a big happen to acquire at on the basis floor.

Today, yell on These 5 latent family Runs >>

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Two Harbors Investments Corp (TWO) : release Stock Analysis Report
SBA Communications corporation (SBAC) : release Stock Analysis Report
Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI) : release Stock Analysis Report
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