Freddie Mac (OTCMKTS:FMCC) Posts Earnings Results

Freddie Mac (OTCMKTS:FMCC) issued its quarterly earnings results on Thursday. The company reported $0.01 earnings per share for the quarter, Zacks reports. The firm had revenue of $6.81 billion during the quarter, compared to the consensus estimate of $6.19 billion. Freddie Mac had a net margin of 9.73% and a negative return on equity of 105.31%.

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 7.0%

Shares of Freddie Mac stock traded up $0.29 on Friday, hitting $4.42. 6,269,866 shares of the company traded hands, compared to its average volume of 4,198,652. The company has a market cap of $2.87 billion, a PE ratio of 221.11 and a beta of 1.74. The stock’s 50 day moving average price is $4.39 and its 200-day moving average price is $5.80. Freddie Mac has a 52 week low of $2.70 and a 52 week high of $11.80.

Wall Street Analyst Weigh In

FMCC has been the topic of several analyst reports. Mizuho lowered Freddie Mac from an “outperform” rating to a “neutral” rating and set a $4.00 target price on the stock. in a report on Monday, October 12th. Wedbush assumed coverage on Freddie Mac in a research report on Thursday, October 22nd. They set an “outperform” rating and a $6.00 price target on the stock. Finally, Keefe, Bruyette & Woods lowered their target price 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. One research analyst has rated the stock with a Buy rating, three have issued a Hold rating and one has given a Sell rating to the company. According to MarketBeat, the stock presently has an average rating of “Hold” and an average price target of $8.38.

Freddie Mac Company Profile

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.