Fannie Mae (OTCMKTS:FNMA) Announces Earnings Results, Beats Expectations By $0.06 EPS

Fannie Mae (OTCMKTS:FNMA) issued its earnings results on Wednesday. The financial services provider reported $0.72 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.66 by $0.06, Zacks reports. The business had revenue of $7.65 billion during the quarter, compared to analyst estimates of $7.45 billion. Fannie Mae had a negative return on equity of 76.66% and a net margin of 4.59%.

Here are the key takeaways from Fannie Mae’s conference call:

• Net income rose to $4.2 billion in the third quarter, up 5% sequentially and 8% year over year, while net worth grew to more than $119 billion. Net revenues reached $7.7 billion, supported by the stable guaranty business.
• Fannie Mae reported continued progress on financial efficiency, including a $27 million quarter-over-quarter reduction in administrative expenses and a 47-basis-point improvement in its expense ratio. The company also expanded its retained mortgage portfolio and increased net interest margin to 69.2 basis points year to date.
• Credit risk increased as the company recorded a $1.1 billion combined provision for single-family and multifamily credit losses, driven by higher interest rates, weakening multifamily metrics, and lower property-value forecasts. Both single-family and multifamily serious delinquency rates rose to 62 basis points.
• Elevated mortgage rates pressured refinancing, single-family acquisitions, multifamily volumes, property values, and affordability. Fannie Mae said it expects ongoing multifamily market challenges to produce additional delinquencies if conditions persist.

Fannie Mae Stock Performance

Shares of FNMA stock opened at $4.15 on Thursday. Fannie Mae has a 12 month low of $2.96 and a 12 month high of $12.39. The stock has a market cap of $4.81 billion, a PE ratio of 103.78 and a beta of 1.68. The company’s fifty day moving average price is $4.90 and its 200-day moving average price is $6.53.

Fannie Mae News Roundup

Here are the key news stories impacting Fannie Mae this week:

• Positive Sentiment: Q3 results exceeded expectations. Fannie Mae reported $4.2 billion in third-quarter net income, up from $4.0 billion in the prior quarter. Net revenue increased to $7.7 billion, while earnings cited by market data providers came to $0.72 per share versus the $0.66 consensus estimate; the year-earlier figure was $0.65. Fannie Mae Surpasses Q3 Earnings and Revenue Estimates
• Positive Sentiment: Higher interest income and balance-sheet growth helped performance. Net interest income benefited from higher rates, and net worth rose to $119.6 billion from $116.5 billion at the end of the second quarter. Fannie Mae also provided $103 billion of mortgage-market liquidity and supported nearly 103,000 first-time homebuyers. Fannie Mae Q3 Net Income and Revenue Rise
• Neutral Sentiment: AI and cybersecurity requirements were updated. The changes could strengthen controls around technology and third-party risks, although they may also increase compliance and implementation costs for Fannie Mae and its counterparties. Fannie Mae Updates AI and Cybersecurity Requirements
• Negative Sentiment: Credit-loss provisions rose sharply. The provision for credit losses increased to $1.1 billion from $485 million in the second quarter, highlighting potential deterioration in mortgage-credit conditions despite the quarterly profit increase. Fannie Mae Earns $4.2 Billion in Third-Quarter Net Income
• Negative Sentiment: Analyst sentiment remains cautious. Wall Street analysts rated FNMA “Reduce,” while broader warnings about landlords’ debt exposure and housing-market risks could limit enthusiasm for the shares. Fannie Mae Stock Rated Reduce

Wall Street Analysts Forecast Growth

FNMA has been the topic of a number of recent research reports. Mizuho set a $5.00 price objective on Fannie Mae and gave the company a “neutral” rating in a research note on Monday, October 12th. Wedbush started coverage on Fannie Mae in a research note on Thursday, October 22nd. They set a “hold” rating and a $3.50 price objective for the company. B. Riley Financial dropped their price target on shares of Fannie Mae from $8.00 to $7.00 and set a “neutral” rating for the company in a research report on Thursday, July 30th. Finally, Keefe, Bruyette & Woods decreased their price objective on shares of Fannie Mae from $6.25 to $3.50 and set an “underperform” rating on the stock in a research report on Monday, September 28th. Five investment analysts have rated the stock with a Hold rating and one has given a Sell rating to the company. According to data from MarketBeat.com, the company presently has an average rating of “Reduce” and a consensus target price of $7.80.

Fannie Mae Company Profile

Fannie Mae, formally known as the Federal National Mortgage Association, is a government-sponsored enterprise that supports the U.S. housing finance system. It operates in the secondary mortgage market, purchasing qualifying residential mortgage loans from approved lenders and helping provide liquidity so those lenders can continue offering mortgage financing to homebuyers and homeowners.

Fannie Mae finances its activities primarily by issuing debt and mortgage-backed securities. It also guarantees certain mortgage-backed securities, helping connect mortgage lenders with institutional investors.