Critical Review: Fannie Mae (OTCMKTS:FNMA) versus Flagstar Bank, National Association (NYSE:FLG)

Flagstar Bank, National Association (NYSE:FLG) and Fannie Mae (OTCMKTS:FNMA) are both mid-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, analyst recommendations, risk, dividends and valuation.

Profitability

This table compares Flagstar Bank, National Association and Fannie Mae’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Flagstar Bank, National Association	1.08%	0.98%	0.08%
Fannie Mae	4.59%	-76.66%	0.51%

Valuation & Earnings

This table compares Flagstar Bank, National Association and Fannie Mae”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Flagstar Bank, National Association	$4.81 billion	1.08	-$177.00 million	$0.03	417.60
Fannie Mae	$159.17 billion	0.04	$14.36 billion	$0.04	129.50

Fannie Mae has higher revenue and earnings than Flagstar Bank, National Association. Fannie Mae is trading at a lower price-to-earnings ratio than Flagstar Bank, National Association, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Flagstar Bank, National Association has a beta of 0.99, meaning that its stock price is 1% less volatile than the S&P 500. Comparatively, Fannie Mae has a beta of 1.7, meaning that its stock price is 70% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and target prices for Flagstar Bank, National Association and Fannie Mae, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Flagstar Bank, National Association	0	4	10	0	2.71
Fannie Mae	1	4	0	1	2.17

Flagstar Bank, National Association presently has a consensus target price of $16.96, suggesting a potential upside of 35.36%. Fannie Mae has a consensus target price of $10.70, suggesting a potential upside of 106.56%. Given Fannie Mae’s higher possible upside, analysts plainly believe Fannie Mae is more favorable than Flagstar Bank, National Association.

Insider & Institutional Ownership

67.9% of Flagstar Bank, National Association shares are owned by institutional investors. Comparatively, 0.0% of Fannie Mae shares are owned by institutional investors. 21.4% of Flagstar Bank, National Association shares are owned by company insiders. Comparatively, 1.0% of Fannie Mae shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Fannie Mae beats Flagstar Bank, National Association on 8 of the 15 factors compared between the two stocks.

About Flagstar Bank, National Association

Flagstar Financial, Inc. operates as the bank holding company for Flagstar Bank, N.A. that provides banking products and services in the United States. The company’s deposit products include interest-bearing checking and money market, savings, non-interest-bearing, and retirement accounts, as well as certificates of deposit. Its loan products comprise multi-family loans; commercial real estate loans; acquisition, development, and construction loans; commercial and industrial loans; one-to-four family loans; specialty finance loans and leases; warehouse loans; and other loans, such as home equity lines of credit, boat and recreational vehicle indirect lending, point of sale consumer loans, and other consumer loans, including overdraft loans. The company offers cash management products; non-deposit investment and insurance products; and online banking, mobile banking, and bank-by-phone services. It primarily serves individuals, small and mid-size businesses, and professional associations. The company was formerly known as New York Community Bancorp, Inc. and changed its name to Flagstar Financial, Inc. in October 2024. Flagstar Financial, Inc. was founded in 1859 and is headquartered in Hicksville, New York.

About Fannie Mae

Federal National Mortgage Association provides financing solutions for mortgages in the United States. It 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. The Multifamily segment securitizes multifamily mortgage loans into Fannie Mae mortgage backed securities (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; and invests in low-income housing tax credit multifamily projects. Federal National Mortgage Association was founded in 1938 and is based in Washington, the District of Columbia.