FNM Fundamental Research Investment Analysis, Fannie Mae

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Fannie Mae (FNM)

The Razor's Edge

2-Year Price History

Recent Price
(2/6/2009)
$0.65
52-Week Price
$0.30 - $35.50
Market Capitalization
$699.5 Million
Dividend Yield
30.80%
Most Recent Dividend
$1.90

About Fannie Mae

Fannie Mae is considered to operate in the Financial sector. They specifically operate in the Mortgage Investment business segment contained within the Real Estate industry.

The Company provides funds to mortgage lenders through purchases of mortgage assets and issuing & guaranteeing mortgage-related securities. It has three business segments: Single-Family Credit Guaranty, Housing & Community Development & Capital Markets.

A Word Of Caution

Fannie Mae (FNM) has experienced a very significant loss in market value recently. Clearly this drop in price will have an impact on the valuation but the recent events that caused the drop may have not been fully factored into our analysis yet. When a stock loses value very quickly it could be a sign that there is a fear of bankruptcy.

Of course, you may proceed to review our research report for this security, but please be aware that our model may not reflect significant factors surrounding this company.

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

Ockham's Rating

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Buy Now or Take the Tour.

FNM Revenue

For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at FNM through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 10 years are 1.25x and 0.49x respectively.

Utilizing this range we can see that FNM’s current Price to Sales per share ratio of 0.04x is significantly below its average levels historically. In fact, with a current price of $0.65, FNM is a full 96% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for FNM.

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 company's 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, it is our goal to provide a balanced view of the stock as an investment, because no analyst can know exactly where management's current focus and direction may be at any one time. Therefore, we utilize a neutral Cash Earnings outlook for FNM until more appropriate positive data can be analyzed.

FNM Dividends

While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company.

In FNM’s case, the estimated annual dividend is $0.20 resulting in a current dividend yield of 30.77%. Similar to our review of Sales and Cash Earnings per share, we evaluate dividend yields from FNM against the historic high and low levels over the past 10 years. The highest dividend yield from FNM over this period was 633.33% while the lowest dividend yield was 0.56% While it is quite common for a growth stock to pay no dividend at all, but for a mature company such as FNM that has a history of paying dividends it is disappointing to see their dividend yield drop so significantly. At this time, the current dividend yield is 90.29% below the median yield.

Peer Comparison

:

Fannie Mae Industry Grouping

(2/6/2009)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not incuding FNM) 12.95 9.07 » 104.77 1.38 1.03 » 4.08 3.53% 9.71%
*10 year range does not include current year values
Fannie Mae FNM $699.5 Million $0.65 -1.00 6.94 » 20.96 0.04 0.03 » 3.80 -3.88% 18.44%
Inland Real Estate Corp. IRC $660.0 Million $9.95 16.05 11.50 » 31.60 3.19 2.63 » 6.87 5.29% 11.16%
DCT Industrial Trust, Inc. DCT $658.7 Million $3.79 23.69 15.56 » 65.94 0.00 0.00 » 0.00 n/a 0.27%
Extra Space Storage, Inc. EXR $657.5 Million $7.69 17.48 13.59 » 82.64 2.33 1.81 » 6.55 n/a 2.42%
Capstead Mortgage Corp. CMO $650.1 Million $11.06 5.40 2.50 » 125.75 1.00 0.29 » 3.47 2.37% 26.62%
Apartment Investment & Management Company AIV $642.7 Million $7.25 2.15 2.17 » 217.90 0.40 0.39 » 3.52 2.95% 8.06%
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Cavuto
2/6/2009 6:20 PM
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2/6/2009 9:10 AM
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2/4/2009 5:44 PM
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2/4/2009 11:24 AM
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2/3/2009 5:37 PM
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2/3/2009 2:38 PM
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2/3/2009 10:48 AM
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2/3/2009 10:06 AM
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2/3/2009 9:07 AM
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2/2/2009 12:08 PM
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2/2/2009 11:29 AM
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2/2/2009 10:44 AM
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1/30/2009 3:31 PM
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1/30/2009 9:46 AM
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1/30/2009 9:44 AM
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1/29/2009 6:19 PM
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1/27/2009 7:12 PM
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1/27/2009 3:46 PM
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1/27/2009 10:26 AM
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1/27/2009 6:05 AM
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1/26/2009 7:08 PM
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1/26/2009 7:01 PM
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1/26/2009 5:29 PM
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1/26/2009 5:27 PM
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1/23/2009 4:19 PM
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1/23/2009 9:04 AM
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1/22/2009 7:03 PM
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1/22/2009 4:23 PM
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1/21/2009 6:05 PM
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1/21/2009 1:11 PM
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1/21/2009 9:07 AM
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1/20/2009 7:04 PM
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1/2/2009 9:31 AM
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12/31/2008 1:17 PM
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View All Fannie Mae Comments

Key Fundamentals

FNM - Fannie Mae Fundamentals
Price (2/6/2009) $0.65
Volume (2/6/2009) 20.6 Million
10 Day Average Volume 12.3 Million
13 Week Price Range $0.30 - $1.25
52 Week Price Range $0.30 - $35.50
LTM Revenue $34.3 Billion
 
Shares Outstanding (12/2007) 1.1 Billion
Market Capitalization $699.5 Million
Shares Held By Institutions 628.1 Million
Institutional Holders 523
% Shares Held By Institutions 58.40%
Earnings Per Share (EPS) ($2.62)
P/E Ratio n/a
Book Value Per Share
 
Gross Margin n/a%
Quarterly Dividend 0.20
Dividend Yield 30.80%
Beta 2.23
Fiscal Year Ends December