Fannie Mae (OTC:FNMA – Get Free Report) and Federal Home Loan Mortgage (OTCMKTS:FMCC – Get Free Report) are both mid-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, dividends, risk, profitability, institutional ownership and earnings.
Profitability
This table compares Fannie Mae and Federal Home Loan Mortgage’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Fannie Mae | 11.22% | -30.10% | 0.39% |
| Federal Home Loan Mortgage | 9.74% | -33.18% | 0.35% |
Insider & Institutional Ownership
0.0% of Fannie Mae shares are owned by institutional investors. 1.0% of Fannie Mae shares are owned by insiders. Comparatively, 0.1% of Federal Home Loan Mortgage shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Valuation and Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Fannie Mae | $139.99 billion | 0.05 | $17.41 billion | N/A | N/A |
| Federal Home Loan Mortgage | $108.05 billion | 0.04 | $10.54 billion | ($0.06) | -102.00 |
Fannie Mae has higher revenue and earnings than Federal Home Loan Mortgage.
Risk and Volatility
Fannie Mae has a beta of 1.98, suggesting that its stock price is 98% more volatile than the S&P 500. Comparatively, Federal Home Loan Mortgage has a beta of 2.09, suggesting that its stock price is 109% more volatile than the S&P 500.
Analyst Recommendations
This is a summary of current ratings and recommmendations for Fannie Mae and Federal Home Loan Mortgage, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Fannie Mae | 0 | 1 | 0 | 0 | 2.00 |
| Federal Home Loan Mortgage | 2 | 0 | 0 | 0 | 1.00 |
Fannie Mae currently has a consensus price target of $3.00, suggesting a potential downside of 54.55%. Federal Home Loan Mortgage has a consensus price target of $2.63, suggesting a potential downside of 57.11%. Given Fannie Mae’s stronger consensus rating and higher possible upside, equities analysts plainly believe Fannie Mae is more favorable than Federal Home Loan Mortgage.
Summary
Fannie Mae beats Federal Home Loan Mortgage on 10 of the 11 factors compared between the two stocks.
About Fannie Mae
Federal National Mortgage Association provides a source of financing for mortgages in the United States. It securitizes mortgage loans originated by lenders into Fannie Mae mortgage-backed securities (Fannie Mae MBS). The company operates through two segments, Single-Family and Multifamily. The Single-Family segment securitizes and purchases single-family fixed-rate or adjustable-rate, first-lien mortgage loans, or mortgage-related securities backed by these loans; and loans that are insured by Federal Housing Administration, loans guaranteed by the Department of Veterans Affairs and Rural Development Housing and Community Facilities Program of the U.S. Department of Agriculture, manufactured housing mortgage loans, and other mortgage-related securities. This segment also provides single-family mortgage servicing, as well as credit risk and loss management services. The Multifamily segment securitizes multifamily mortgage loans into Fannie Mae MBS; purchases multifamily mortgage loans; and provides credit enhancement for bonds issued by state and local housing finance authorities to finance multifamily housing. This segment also issues structured MBS backed by Fannie Mae multifamily MBS; buys and sells multifamily agency mortgage-backed securities; invests in low-income housing tax credit (LIHTC) multifamily projects; and offers delegated underwriting and servicing, as well as multifamily mortgage, and credit risk and loss management services. The company serves mortgage banking companies, savings and loan associations, savings banks, commercial banks, credit unions, community banks, insurance companies, private mortgage originators, and state and local housing finance agencies. Federal National Mortgage Association was founded in 1938 and is headquartered in Washington, the District of Columbia.
About Federal Home Loan Mortgage
Federal Home Loan Mortgage Corporation operates in the secondary mortgage market in the United States. It operates through two segments, Single-Family and Multifamily. The Single-Family segment purchases, securitizes, and guarantees single-family loans; and manages single-family mortgage credit and market risk, as well as manages mortgage-related investments portfolio, single-family securitization activities, and treasury functions. This segment serves mortgage banking companies, commercial banks, regional banks, community banks, credit unions, housing finance agencies, savings institutions, and non-depository financial institutions. The Multifamily segment engages in the purchase, securitization, and guarantee of multifamily loans; issuance of multifamily K certificates; manages multifamily mortgage credit and market risk; and invests in multifamily loans and mortgage-related securities. It serves banks and other financial institutions, insurance companies, money managers, hedge funds, pension funds, state and local governments, and broker dealers. Federal Home Loan Mortgage Corporation incorporated in 1970 and is headquartered in McLean, Virginia.
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