MainStreet Bank (NASDAQ:MNSB) & Fannie Mae (OTCMKTS:FNMA) Critical Review

Fannie Mae (OTCMKTS:FNMA) and MainStreet Bank (NASDAQ:MNSB) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, risk, earnings and valuation.

Risk and Volatility

Fannie Mae has a beta of 1.7, suggesting that its stock price is 70% more volatile than the S&P 500. Comparatively, MainStreet Bank has a beta of 0.55, suggesting that its stock price is 45% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Fannie Mae	4.59%	-76.66%	0.51%
MainStreet Bank	13.24%	9.16%	0.79%

Earnings & Valuation

This table compares Fannie Mae and MainStreet Bank”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fannie Mae	$159.17 billion	0.03	$14.36 billion	$0.04	106.50
MainStreet Bank	$135.62 million	1.30	$15.61 million	$2.04	12.15

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

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Fannie Mae and MainStreet Bank, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fannie Mae	1	4	0	1	2.17
MainStreet Bank	0	1	1	0	2.50

Fannie Mae currently has a consensus target price of $9.70, indicating a potential upside of 127.70%. Given Fannie Mae’s higher possible upside, equities analysts plainly believe Fannie Mae is more favorable than MainStreet Bank.

Institutional & Insider Ownership

0.0% of Fannie Mae shares are owned by institutional investors. Comparatively, 52.3% of MainStreet Bank shares are owned by institutional investors. 1.0% of Fannie Mae shares are owned by insiders. Comparatively, 10.2% of MainStreet Bank shares are owned by 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

MainStreet Bank beats Fannie Mae on 9 of the 15 factors compared between the two stocks.

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.

About MainStreet Bank

MainStreet Bancshares, Inc. operates as the bank holding company for MainStreet Bank that provides various banking products and services for individuals, small to medium-sized businesses, and professional service organizations. The company offers demand, NOW, money market, savings, and sweep accounts, as well as certificates of deposit; business and consumer checking, interest-bearing checking, business account analysis, and other depository services; and cash management, wire transfer, check imaging, bill pay, remote deposit capture, and courier services. It also provides commercial loans, include government contract receivables, plant and equipment, general working capital, contract administration, and acquisition loans; commercial real estate, real estate construction, and residential real estate loans; and consumer loans comprising term loans and overdraft protection, as well as debit and credit cards. In addition, the company offers deposit insurance solutions; remote deposit of checks; and internet bill payment, online cash management, and online and mobile banking services. It operates in Herndon, Fairfax, McLean, Leesburg, Clarendon, and Washington D.C., as well as automated teller machines. The company was incorporated in 2003 and is headquartered in Fairfax, Virginia.