Fannie Mae (OTCMKTS:FNMA) Posts Quarterly Earnings Results, Beats Estimates 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 analysts’ consensus estimates of $0.66 by $0.06, Zacks reports.

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 Down 1.6%

Shares of FNMA stock traded down $0.07 on Wednesday, reaching $4.22. The stock had a trading volume of 1,414,295 shares, compared to its average volume of 5,303,897. The firm’s 50-day moving average is $4.94 and its two-hundred day moving average is $6.56. Fannie Mae has a 12 month low of $2.96 and a 12 month high of $12.39.

Analyst Ratings Changes

Several equities research analysts recently issued reports on FNMA shares. Wedbush reissued a “hold” rating and issued a $3.50 price objective on shares of Fannie Mae in a research note on Thursday, October 22nd. Keefe, Bruyette & Woods decreased their target price on Fannie Mae from $6.25 to $3.50 and set an “underperform” rating on the stock in a research report on Monday, September 28th. Mizuho set a $5.00 price objective on Fannie Mae and gave the stock a “neutral” rating in a research note on Monday, October 12th. Finally, B. Riley Financial reduced their price target on shares of Fannie Mae from $8.00 to $7.00 and set a “neutral” rating on the stock in a research report on Thursday, July 30th. Five analysts have rated the stock with a Hold rating and one has assigned a Sell rating to the company’s stock. According to data from MarketBeat, Fannie Mae presently has a consensus rating of “Reduce” and an average price target of $7.80.

Key Stories Impacting Fannie Mae

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

• Positive Sentiment: Quarterly earnings exceeded expectations. Fannie Mae reported adjusted earnings of $0.72 per share, above the $0.66 consensus estimate and up from $0.65 a year earlier. Revenue also surpassed expectations, providing a near-term positive catalyst. Fannie Mae Surpasses Q3 Earnings and Revenue Estimates
• Positive Sentiment: Net income, revenue and net worth increased. Third-quarter net income rose to $4.2 billion from $4.0 billion in the second quarter, while net revenue increased to $7.7 billion. Net worth reached $119.6 billion, up from $116.5 billion at quarter-end. Higher net interest income, supported by elevated interest rates, helped results. Fannie Mae Q3 Net Income and Revenue Rise
• Positive Sentiment: Fannie Mae continued supporting the mortgage market. The company provided $103 billion in liquidity during the quarter and helped nearly 103,000 first-time homebuyers, reinforcing its role in housing finance and potentially supporting long-term franchise value. Fannie Mae Reports Third-Quarter Results
• Neutral Sentiment: Updated AI and cybersecurity requirements could affect operations and costs. The changes may strengthen risk controls, but implementation expenses and compliance demands could limit any immediate earnings benefit. Fannie Mae Updates AI and Cybersecurity Requirements
• Negative Sentiment: Credit-loss provisions increased sharply. Provisions for credit losses rose to $1.1 billion from $485 million in the prior quarter, signaling greater concern about borrower or housing-market deterioration and tempering the impact of the earnings beat. Fannie Mae Earns $4.2 Billion in Third-Quarter Net Income
• Negative Sentiment: Analyst and housing-market caution remain overhangs. A Wall Street analyst rating of “Reduce” and warnings about a potential $1.8 trillion landlord debt reckoning may be weighing on sentiment. FNMA also trades below its 50-day and 200-day moving averages, reflecting continued technical weakness.

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.