Critical Review: Fannie Mae (FNMA) & The Competition

Fannie Mae (OTCMKTS:FNMA) is one of 19 public companies in the “FIN – MTG&REL SVS” industry, but how does it contrast to its peers? We will compare Fannie Mae to similar businesses based on the strength of its dividends, institutional ownership, analyst recommendations, valuation, earnings, risk and profitability.

Institutional and Insider Ownership

0.0% of Fannie Mae shares are owned by institutional investors. Comparatively, 52.2% of shares of all “FIN – MTG&REL SVS” companies are owned by institutional investors. 1.0% of Fannie Mae shares are owned by company insiders. Comparatively, 28.4% of shares of all “FIN – MTG&REL SVS” companies are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings for Fannie Mae and its peers, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fannie Mae	1	3	1	2	2.57
Fannie Mae Competitors	254	874	1138	35	2.41

Fannie Mae currently has a consensus price target of $12.75, indicating a potential upside of 76.35%. As a group, “FIN – MTG&REL SVS” companies have a potential upside of 51.62%. Given Fannie Mae’s stronger consensus rating and higher possible upside, analysts clearly believe Fannie Mae is more favorable than its peers.

Profitability

This table compares Fannie Mae and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Fannie Mae	4.53%	-65.94%	0.50%
Fannie Mae Competitors	3.88%	-27.45%	0.35%

Valuation and Earnings

This table compares Fannie Mae and its peers top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Fannie Mae	$159.17 billion	$14.36 billion	723.00
Fannie Mae Competitors	$19.41 billion	$1.63 billion	82.96

Fannie Mae has higher revenue and earnings than its peers. Fannie Mae is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Risk and Volatility

Fannie Mae has a beta of 1.66, suggesting that its share price is 66% more volatile than the S&P 500. Comparatively, Fannie Mae’s peers have a beta of 1.25, suggesting that their average share price is 25% more volatile than the S&P 500.

Summary

Fannie Mae beats its peers on 9 of the 13 factors compared.

Fannie Mae Company Profile

Federal National Mortgage Association provides financing solutions for mortgages in the United States. It 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. The Multifamily segment securitizes multifamily mortgage loans into Fannie Mae mortgage backed securities (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; and invests in low-income housing tax credit multifamily projects. Federal National Mortgage Association was founded in 1938 and is based in Washington, the District of Columbia.