Freddie Mac (OTCMKTS:FMCC) Releases Quarterly Earnings Results

Freddie Mac (OTCMKTS:FMCC) issued its quarterly earnings results on Thursday. The company reported $0.01 earnings per share (EPS) for the quarter, Zacks reports. Freddie Mac had a net margin of 9.58% and a negative return on equity of 90.29%. The company had revenue of $6.81 billion during the quarter, compared to analyst estimates of $6.19 billion.

Here are the key takeaways from Freddie Mac’s conference call:

• Net income rose 17% year over year to $3.2 billion, while net revenues increased 19% to $6.8 billion, supported by higher net interest and non-interest income. Non-interest expense declined 6% due to efficiency and expense-discipline efforts.
• Freddie Mac’s net worth reached nearly $81 billion, up 20% year over year, and its mortgage portfolio grew 2% to nearly $3.7 trillion after providing $114 billion of housing-market liquidity.
• Credit costs increased sharply, with the provision for credit losses rising to $800 million from $175 million a year earlier. Higher projected mortgage rates extended expected loan lives, while single-family serious delinquencies rose to 61 basis points and multifamily delinquencies increased to 58 basis points.
• Elevated mortgage rates continued to weigh on housing activity, with multifamily new business volume falling to $16 billion from $25 billion a year earlier. Multifamily property prices also declined and cap rates increased, although the company said its shift toward fully guaranteed securitizations should make earnings more stable over time.
• Despite retained-earnings growth, Freddie Mac reported a $98 billion regulatory-capital shortfall excluding buffers, largely because $73 billion of senior preferred stock does not qualify as regulatory capital.

Freddie Mac Trading Up 1.9%

FMCC traded up $0.08 during trading on Friday, hitting $4.21. 618,718 shares of the company’s stock traded hands, compared to its average volume of 2,784,440. The stock has a market capitalization of $2.73 billion, a price-to-earnings ratio of 421.07 and a beta of 1.74. The company’s 50 day simple moving average is $4.41 and its two-hundred day simple moving average is $5.83. Freddie Mac has a 12-month low of $2.70 and a 12-month high of $11.80.

Analyst Ratings Changes

Several research firms recently commented on FMCC. Keefe, Bruyette & Woods dropped their price objective on shares of Freddie Mac from $6.50 to $3.50 and set an “underperform” rating on the stock in a research note on Monday, September 28th. Mizuho downgraded shares of Freddie Mac from an “outperform” rating to a “neutral” rating and set a $4.00 target price for the company. in a research note on Monday, October 12th. Finally, Wedbush assumed coverage on shares of Freddie Mac in a report on Thursday, October 22nd. They set an “outperform” rating and a $6.00 target price for the company. One investment analyst has rated the stock with a Buy rating, three have given a Hold rating and one has issued a Sell rating to the company’s stock. According to data from MarketBeat, Freddie Mac presently has an average rating of “Hold” and an average target price of $8.38.

About Freddie Mac

Freddie Mac, formally known as the Federal Home Loan Mortgage Corporation, is a government-sponsored enterprise focused on supporting liquidity, stability and affordability in the U.S. housing market. It operates primarily in the secondary mortgage market rather than making most home loans directly to consumers.

The company purchases residential mortgage loans from approved lenders, providing those institutions with funds to make additional loans. Freddie Mac also pools eligible mortgages into securities that it guarantees and sells to investors.