MFA Financial, Inc. (NYSE:MFA) finances depend on productivity growth


Dallas, Texas 09/11/2013 (Financialstrend) – MFA Financial, Inc. (NYSE:MFA) is a REIT that is headquartered in NY. The company is involved in the investing business and it invests in non-agency MBS and RMBS. Over the trailing 12 months, the stock has traded in the narrow 52 week range of $6.36-$8.89. In Tuesday’s trading session, the company’s stock dipped by 0.68%. The shares had an opening price of $7.33 which climbed to an intraday high of $7.33 and closed at a price of $7.26. Approximately 2.47 million MFA shares were traded in Tuesday’s trading which was below the 3.44 average volume of shares that were traded over a 30 day period. The company has a market capitalization of $2.63 billion.

The productivity growth factor

According to the recent report by the Bureau of labor Statistics report for the Q2, after 3rd and final revision, the productivity has risen at a 2.35 annualized-rate from the 1st quarter when it stood at -1.7%. The output and the number of hours worked for the 2nd quarter rose by 3.7% and 1.4% respectively. In the short-term, productivity reduces the demand for labor, but in the long term, it has the potential to turn favorable for the overall economy.

This is relevant in the current day REIT scenario because good productivity-growth levels encourage the Fed to maintain the current interest-rate environment. Theoretically, if there is no volatility in interest rates REIT’s like MFA Financial, Inc (NYSE:MFA) stand to benefit as a rise in volatility also increased hedging costs. REITS like MFA, CMO and AGNC are greatly vulnerable to any shocks in interest rates as they have a high leverage and their mortgages are more sensitive. As a result this kind of an interest-rate environment favors these stocks.

The company

MFA’s business objective is the generation of net income to distribution it to its shareholders. This income is the result of the difference between any interest and the other income that it earns on investments and any interest expense that it pays on its borrowings. The company uses these to finance its leveraged-investments as well as its operating costs.