Granite Point Mortgage Trust (GPMT) Reports Second Quarter Loss, Misses Revenue Estimates

Granite Point Mortgage Trust (GPMT) came out with a quarterly loss of $0.05 per share, compared to the Zacks Consensus Estimate of a loss of $0.08. This compares to earnings of $0.12 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 37.50%. A quarter ago, it was expected that this real estate investment trust would post earnings of $0.10 per share when it actually produced a loss of $0.03, delivering a surprise of -130%.

Over the past four quarters, the company has twice exceeded consensus EPS estimates.

Granite Point Mortgage Trust, which belongs to the Zacks Real Estate Investment Trusts and Equity Mutual Funds industry, posted revenues of $8.13 million for the quarter ended June 2024, which was 14.41% below the Zacks Consensus Estimate. This compares to revenues of $27.2 million in the prior year. The company has failed to surpass the consensus revenue estimates in the trailing four quarters.

The sustainability of the stock’s immediate price movement based on the recently released numbers and future earnings expectations will mostly depend on management’s commentary during the earnings conference call.

Shares of Granite Point Mortgage Trust have lost about 52.7% since the beginning of the year, compared with a gain of 12.1% for the S&P 500.

What’s next for Granite Point Mortgage Trust?

Although Granite Point Mortgage Trust has underperformed the market so far this year, the question on investors’ minds is: what’s next for the stock?

There is no easy answer to this key question, but one reliable measure that can help investors address this is the company’s earnings outlook. This includes not only current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed recently.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has a proven track record of harnessing the power of earnings estimate revisions.

Ahead of these earnings releases, the estimate revisions trend for Granite Point Mortgage Trust is mixed. While the magnitude and direction of estimate revisions could change following the company’s earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. Thus, shares are expected to move in line with the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the next quarters and the current fiscal year evolve in the days ahead. The current consensus EPS estimate is -$0.41 on $9.8 million in revenue for the next quarter and -$0.84 on $42.9 million in revenue for the current fiscal year.

Investors should keep in mind that the outlook for the industry can also have a significant impact on stock performance. In terms of the Zacks Industry Rank, REIT and Equity Trust currently ranks in the top 27% of the 250+ Zacks-ranked industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another stock in the same sector, Ellington Credit (EARN), has yet to report results for the quarter ending June 2024. The results are expected to be released on August 12.

This residential mortgage real estate investment trust is expected to report quarterly earnings of $0.24 per share in its upcoming report, which represents a year-over-year change of +41.2%. The consensus EPS estimate for the quarter has remained unchanged over the past 30 days.

Ellington Credit’s revenue is expected to be $6.35 million, up 492% from the year-ago quarter.

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