Contrasting Fannie Mae (OTC:FNMA) and Federal Agricultural Mortgage (NYSE:AGM)

Fannie Mae (OTC:FNMA) and Federal Agricultural Mortgage (NYSE:AGM) are both mid-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, institutional ownership, dividends, valuation and risk.

Risk & Volatility

Fannie Mae has a beta of 1.98, meaning that its share price is 98% more volatile than the S&P 500. Comparatively, Federal Agricultural Mortgage has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500.

Institutional and Insider Ownership

0.0% of Fannie Mae shares are held by institutional investors. Comparatively, 68.0% of Federal Agricultural Mortgage shares are held by institutional investors. 1.0% of Fannie Mae shares are held by company insiders. Comparatively, 2.6% of Federal Agricultural Mortgage shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Fannie Mae and Federal Agricultural 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 Agricultural Mortgage	12.59%	20.14%	0.67%

Valuation and Earnings

This table compares Fannie Mae and Federal Agricultural Mortgage”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fannie Mae	$139.99 billion	0.06	$17.41 billion	N/A	N/A
Federal Agricultural Mortgage	$1.42 billion	1.54	$200.00 million	$15.55	12.85

Fannie Mae has higher revenue and earnings than Federal Agricultural Mortgage.

Analyst Ratings

This is a summary of current ratings and recommmendations for Fannie Mae and Federal Agricultural Mortgage, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fannie Mae	0	1	0	0	2.00
Federal Agricultural Mortgage	0	1	0	0	2.00

Fannie Mae currently has a consensus price target of $3.00, indicating a potential downside of 57.69%. Federal Agricultural Mortgage has a consensus price target of $215.00, indicating a potential upside of 7.61%. Given Federal Agricultural Mortgage’s higher possible upside, analysts clearly believe Federal Agricultural Mortgage is more favorable than Fannie Mae.

Summary

Federal Agricultural Mortgage beats Fannie Mae on 7 of the 10 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 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: Corporate AgFinance, Farm & Ranch, Rural Utilities, and Renewable Energy. The company’s Agricultural Finance line of business engages in purchasing and retaining eligible loans and securities; guaranteeing the payment of principal and interest on securities that represent interests in or obligations secured by pools of eligible loans; servicing eligible loans; and issuing LTSPCs for eligible loans. Its Rural Infrastructure Finance line of business is involved in the purchase of rural utilities loans and renewable energy loans and guarantees of securities backed by loans, as well as LTSPCs for pools of eligible rural utilities loans; by loans for electric or telecommunications facilities by lenders organized as cooperatives to borrowers; and other financial institutions that are secured by pools of eligible loans. Federal Agricultural Mortgage Corporation was incorporated in 1987 and is headquartered in Washington, the District of Columbia.