Analyzing Freddie Mac (OTC:FMCC) and Federal Agricultural Mortgage (NYSE:AGM)

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

Risk & Volatility

Federal Agricultural Mortgage has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500. Comparatively, Freddie Mac has a beta of 2.09, indicating that its share price is 109% more volatile than the S&P 500.

Profitability

This table compares Federal Agricultural Mortgage and Freddie Mac’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Federal Agricultural Mortgage	12.59%	20.14%	0.67%
Freddie Mac	9.74%	-33.18%	0.35%

Analyst Recommendations

This is a summary of current recommendations and price targets for Federal Agricultural Mortgage and Freddie Mac, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Federal Agricultural Mortgage	0	1	0	0	2.00
Freddie Mac	0	0	0	0	0.00

Federal Agricultural Mortgage presently has a consensus target price of $215.00, indicating a potential upside of 9.06%. Given Federal Agricultural Mortgage’s stronger consensus rating and higher probable upside, analysts plainly believe Federal Agricultural Mortgage is more favorable than Freddie Mac.

Earnings and Valuation

This table compares Federal Agricultural Mortgage and Freddie Mac”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Federal Agricultural Mortgage	$1.42 billion	1.51	$200.00 million	$15.55	12.68
Freddie Mac	$108.05 billion	0.04	$10.54 billion	($0.06)	-101.98

Freddie Mac has higher revenue and earnings than Federal Agricultural Mortgage. Freddie Mac is trading at a lower price-to-earnings ratio than Federal Agricultural Mortgage, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

68.0% of Federal Agricultural Mortgage shares are owned by institutional investors. 2.6% of Federal Agricultural Mortgage shares are owned by company insiders. Comparatively, 0.1% of Freddie Mac shares are owned 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.

Summary

Federal Agricultural Mortgage beats Freddie Mac on 10 of the 13 factors compared between the two stocks.

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.

About Freddie Mac

Federal Home Loan Mortgage Corporation operates in the secondary mortgage market in the United States. The company purchases single-family and multifamily residential mortgage loans originated by lenders, as well as invests in mortgage loans and mortgage-related securities. 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 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, sale, securitization, and guarantee of 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. It 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 a range of lenders. The company was founded in 1970 and is headquartered in McLean, Virginia.