NEW YORK (TheStreet) -- Shares of Fannie Mae (FNMA) and Freddie Mac (FMCC) are higher today after a coalition of investors in both companies began a move to stop Congress from going forward with a U.S. housing finance reform bill, saying it would deny them of a fair share in any remaining value in the companies.
Fannie Mae's share are up 0.99% to 4.10, while Freddie Mac's shares are up 1.23% to 4.12.
The new tax-exempt group, Investors Unite, said it wants to protect the rights of shareholders in the bailed-out mortgage finance companies. It is holding meetings in Washington and sending dozens of investors to Capitol Hill to promote its cause, Reuters reports.
The group opposes the bill because it would prevent the companies from recapitalizing and compensating shareholders.
Later this month a Senate Banking Committee meeting will focus on a bill that would abolish Fannie Mae and Freddie Mac, replacing them with a new agency to back home loans.
TheStreet Ratings team rates FANNIE MAE as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate FANNIE MAE (FNMA) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity, weak operating cash flow and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Thrifts & Mortgage Finance industry. The net income has decreased by 14.7% when compared to the same quarter one year ago, dropping from $7,570.00 million to $6,457.00 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market, FANNIE MAE's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to $1,385.00 million or 70.66% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- FANNIE MAE has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, FANNIE MAE swung to a loss, reporting -$0.26 versus $0.23 in the prior year. This year, the market expects an improvement in earnings ($2.30 versus -$0.26).
- The gross profit margin for FANNIE MAE is currently very high, coming in at 100.56%. Regardless of FNMA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 20.45% trails the industry average.
- You can view the full analysis from the report here: FNMA Ratings Report