Federal National Mortgage Association (OTCMKTS:FNMA) and Federal Home Loan Mortgage (OTCMKTS:FMCC) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, analyst recommendations, profitability, institutional ownership and valuation.
Valuation & Earnings
This table compares Federal National Mortgage Association and Federal Home Loan Mortgage’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Federal National Mortgage Association||$112.39 billion||0.01||$2.46 billion||N/A||N/A|
|Federal Home Loan Mortgage||$74.68 billion||0.01||$5.63 billion||N/A||N/A|
This is a breakdown of current ratings and target prices for Federal National Mortgage Association and Federal Home Loan Mortgage, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Federal National Mortgage Association||1||0||0||0||1.00|
|Federal Home Loan Mortgage||0||0||0||0||N/A|
Volatility & Risk
Federal National Mortgage Association has a beta of 2.05, meaning that its share price is 105% more volatile than the S&P 500. Comparatively, Federal Home Loan Mortgage has a beta of 2.08, meaning that its share price is 108% more volatile than the S&P 500.
This table compares Federal National Mortgage Association and Federal Home Loan Mortgage’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Federal National Mortgage Association||14.91%||-20.38%||0.82%|
|Federal Home Loan Mortgage||7.01%||-12.21%||0.50%|
Institutional and Insider Ownership
0.2% of Federal National Mortgage Association shares are held by institutional investors. Comparatively, 0.0% of Federal Home Loan Mortgage shares are held by institutional investors. 1.0% of Federal National Mortgage Association shares are held by insiders. Comparatively, 0.1% of Federal Home Loan Mortgage shares are held by 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.
Federal National Mortgage Association beats Federal Home Loan Mortgage on 7 of the 10 factors compared between the two stocks.
Federal National Mortgage Association Company Profile
Federal National Mortgage Association provides liquidity and stability support services for the mortgage market 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 loans, and other mortgage-related securities. This segment also provides early funding, MBS trading, and single-family mortgage 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 offers delegated underwriting and servicing, and multifamily mortgage servicing services. The company serves mortgage banking companies, savings and loan associations, savings banks, commercial banks, credit unions, community banks, specialty servicers, insurance companies, and state and local housing finance agencies. Federal National Mortgage Association was founded in 1938 and is based in Washington, the District of Columbia.
Federal Home Loan Mortgage Company Profile
Federal Home Loan Mortgage Corporation operates in the secondary mortgage market in the United States. The company purchases residential mortgage loans originated by lenders, as well as invests in mortgage loans and mortgage-related securities. It operates in three segments: Single-family Guarantee, Multifamily, and Capital Markets. The Single-family Guarantee segment purchases, securitizes, and guarantees single-family loans; and manages single-family mortgage credit risk. This segment serves lenders, including mortgage banking companies, commercial banks, community banks, regional banks, credit unions, housing finance agencies, savings institutions, and other non-depository financial institutions. The Multifamily segment engages in the purchase, sale, securitization, and guarantee activities in multifamily loans and securities through the issuance of multifamily K and SB certificates; issuing and guarantying other securitization products; issuing other credit risk transfer products; and provision of other mortgage-related guarantees, as well as post-construction financing to apartment project operators. The Capital Markets segment invests principally in mortgage-related securities and single-family performing loans. This segment serves banks and other depository institutions, insurance companies, money managers, central banks, pension funds, state and local governments, real estate investment trusts, brokers and dealers, and lenders. Federal Home Loan Mortgage Corporation was founded in 1970 and is headquartered in McLean, Virginia.
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