Analyzing Federal Home Loan Mortgage (OTCMKTS:FMCC) & Fannie Mae (OTC:FNMA)

Federal Home Loan Mortgage (OTCMKTS:FMCC) and Fannie Mae (OTC:FNMA) are both mid-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, risk, earnings and valuation.

Insider & Institutional Ownership

0.0% of Fannie Mae shares are owned by institutional investors. 0.1% of Federal Home Loan Mortgage shares are owned by insiders. Comparatively, 1.0% of Fannie Mae shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Federal Home Loan Mortgage	9.74%	-33.18%	0.35%
Fannie Mae	11.22%	-30.10%	0.39%

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Federal Home Loan Mortgage	$108.05 billion	0.04	$10.54 billion	($0.06)	-104.50
Fannie Mae	$139.99 billion	0.06	$17.41 billion	N/A	N/A

Fannie Mae has higher revenue and earnings than Federal Home Loan Mortgage.

Risk & Volatility

Federal Home Loan Mortgage has a beta of 2.09, suggesting that its share price is 109% more volatile than the S&P 500. Comparatively, Fannie Mae has a beta of 1.98, suggesting that its share price is 98% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings for Federal Home Loan Mortgage and Fannie Mae, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Federal Home Loan Mortgage	2	0	0	0	1.00
Fannie Mae	0	1	0	0	2.00

Federal Home Loan Mortgage presently has a consensus target price of $2.63, suggesting a potential downside of 58.13%. Fannie Mae has a consensus target price of $3.00, suggesting a potential downside of 56.01%. Given Fannie Mae’s stronger consensus rating and higher possible upside, analysts clearly 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 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.

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.