Why Dynex Capital's Shares Dropped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of mortgage REIT Dynex Capital fell 10% today after the company released earnings.

So what: Interest income rose 29.2% from a year ago to $33.0 million, but expenses rose 41% to squeeze margins. Net income did rise from $18.8 million to $29.4 million, which was solid, but investors were expecting more.  

Now what: Long-term interest rates were up during the quarter, which should help mortgage REITs, who borrow at short-term rates. But the rise also lowers the value of the portfolio and can make earnings very volatile. The increase in income is solid, but expect more volatility going forward, especially with uncertainty in interest rates.

Interested in more info on Dynex Capital? Add it to your watchlist by clicking here.

The article Why Dynex Capital's Shares Dropped originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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