FNM Stock Report

2-Year Price History

A Word Of Caution

The Ockham Research Team has placed an alert on this security because there have been significant developments associated with Fannie Mae (FNM). Eventually, these externalities may have an impact on our valuation but these recent events have not yet been fully factored into our analysis.

Please take a moment to look at the RazorWire feed on the right hand side of the report. Each mention of Fannie Mae on business television will be displayed to the right of the report. This should help bring you up to speed on any major issues they are facing right now.

Of course, you may proceed to review our research report for this security, but please be aware that our model may not reflect these significant factors surrounding this company as our data sources are still being updated. This alert shall remain in effect until the situation surrounding this security normalizes substantially.

Therefore, (and as always), check additional sources and available information regarding FNM before making an investment decision.

Ockham's Rating

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FNM Revenue

As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, FNM the high and low end of the Price to Sales per share ratios are 1.35x and 0.73x respectively.

Notice that FNM's current Price to Sales per share ratio is 0.04x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $0.59, FNM is 97% below where we would expect to see it. This will beneficially factor into our final analysis of FNM as it is not often that this stock sinks to these levels.

FNM Cash Earnings

FNM is not forecasted to produce positive Cash Earnings this year, based on recent performance. This is not a positive situation, as we would always prefer that a company is producing cash every year. However, it is important to recognize that not all companies or types of companies have the goal of producing positive Cash Earnings either early in their business cycle or following significant turnaround changes. When looking at FNM, we hesitate to be overly negative on the company, but it is of concern that the company is not profitable at this time. Let's face it, companies cannot remain unprofitable for very long before a change has to be made. This could mean further restructuring or corporate event such as selling assets or spinning off divisions, at any rate a company with negative cash flows is not one that often makes a great investment unless you can acquire it at an extremely depressed price.

FNM Dividends

When determining a company's future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn't imperative for FNM to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis.