Critical Review: Federal Agricultural Mortgage (AGM) vs. Federal Home Loan Mortgage (FMCC)

Federal Agricultural Mortgage (NYSE: AGM) and Federal Home Loan Mortgage (OTCMKTS:FMCC) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, institutional ownership, risk, dividends, earnings and analyst recommendations.

Analyst Ratings

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This is a summary of current ratings and recommmendations for Federal Agricultural Mortgage and Federal Home Loan Mortgage, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Federal Agricultural Mortgage 0 1 1 0 2.50
Federal Home Loan Mortgage 0 0 0 0 N/A

Federal Agricultural Mortgage presently has a consensus price target of $93.50, indicating a potential upside of 11.05%. Given Federal Agricultural Mortgage’s higher possible upside, analysts clearly believe Federal Agricultural Mortgage is more favorable than Federal Home Loan Mortgage.

Dividends

Federal Agricultural Mortgage pays an annual dividend of $2.32 per share and has a dividend yield of 2.8%. Federal Home Loan Mortgage does not pay a dividend. Federal Agricultural Mortgage has raised its dividend for 6 consecutive years.

Insider & Institutional Ownership

64.4% of Federal Agricultural Mortgage shares are held by institutional investors. Comparatively, 0.0% of Federal Home Loan Mortgage shares are held by institutional investors. 3.8% of Federal Agricultural Mortgage shares are held by company insiders. Comparatively, 0.1% of Federal Home Loan Mortgage shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility and Risk

Federal Agricultural Mortgage has a beta of 1.17, indicating that its share price is 17% more volatile than the S&P 500. Comparatively, Federal Home Loan Mortgage has a beta of 3.4, indicating that its share price is 240% more volatile than the S&P 500.

Earnings and Valuation

This table compares Federal Agricultural Mortgage and Federal Home Loan Mortgage’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Federal Agricultural Mortgage $418.04 million 2.14 $84.48 million N/A N/A
Federal Home Loan Mortgage $74.68 billion 0.01 $5.63 billion N/A N/A

Federal Home Loan Mortgage has higher revenue and earnings than Federal Agricultural Mortgage.

Profitability

This table compares Federal Agricultural Mortgage and Federal Home Loan Mortgage’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Federal Agricultural Mortgage 20.21% 15.12% 0.43%
Federal Home Loan Mortgage 7.53% -6.71% 0.28%

Summary

Federal Agricultural Mortgage beats Federal Home Loan Mortgage on 11 of the 14 factors compared between the two stocks.

About Federal Agricultural Mortgage

Federal Agricultural Mortgage Corporation provides a secondary market for various loans made to borrowers in the United States. It operates through four segments: Farm & Ranch, USDA Guarantees, Rural Utilities, and Institutional Credit. The Farm & Ranch segment purchases and retains eligible mortgage loans that are secured by first liens on agricultural real estate; securitizes eligible mortgage loans, and guarantees the timely payment of principal and interest on securities representing interests in or obligations secured by pools of mortgage loans; and issues long-term standby purchase commitments on designated eligible mortgage loans. The USDA Guarantees segment purchases portions of certain agricultural, rural development, business and industry, and community facilities loans guaranteed by the United States Department of Agriculture (USDA). The Rural Utilities segment purchases and guarantees securities that are backed by eligible rural electric and telephone loans. The Institutional Credit segment engages in purchasing and guaranteeing general obligations of institutions that are secured by types of loans eligible under the Farm & Ranch, USDA Guarantees, or Rural Utilities lines of business. Federal Agricultural Mortgage Corporation was founded in 1987 and is headquartered in Washington, District of Columbia.

About Federal Home Loan Mortgage

Federal Home Loan Mortgage Corporation is a government-sponsored enterprise (GSE). The Company is engaged in purchasing residential mortgage loans originated by lenders. The Company also invests in mortgage loans and mortgage-related securities. Its segments include Single-family Guarantee, Multifamily, Investments and All Other. The Single-family Guarantee segment includes the purchase, securitization and guarantee of single-family loans and the management of single-family credit risk. The Multifamily segment includes the purchase, securitization and guarantee of multifamily loans and securities; its investments in these loans and securities, and the management of multifamily mortgage credit risk and mortgage market spread risk. The Investments segment manages its mortgage-related investments portfolio (excluding Multifamily segment investments, single-family seriously delinquent loans, and the credit risk of single-family performing loans), treasury function and interest-rate risk.

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