Contrasting Freddie Mac (OTCMKTS:FMCC) & Walker & Dunlop (NYSE:WD)

Freddie Mac (OTCMKTS:FMCC) and Walker & Dunlop (NYSE:WD) are both mid-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, valuation, dividends, analyst recommendations and risk.

Profitability

This table compares Freddie Mac and Walker & Dunlop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Freddie Mac	9.04%	-44.33%	0.34%
Walker & Dunlop	9.27%	8.81%	3.40%

Institutional and Insider Ownership

81.0% of Walker & Dunlop shares are owned by institutional investors. 0.1% of Freddie Mac shares are owned by company insiders. Comparatively, 3.7% of Walker & Dunlop shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Freddie Mac and Walker & Dunlop, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Freddie Mac	1	0	1	0	2.00
Walker & Dunlop	0	2	4	0	2.67

Freddie Mac currently has a consensus price target of $18.00, suggesting a potential upside of 58.49%. Walker & Dunlop has a consensus price target of $94.25, suggesting a potential upside of 9.10%. Given Freddie Mac’s higher possible upside, equities analysts plainly believe Freddie Mac is more favorable than Walker & Dunlop.

Earnings and Valuation

This table compares Freddie Mac and Walker & Dunlop”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Freddie Mac	$122.05 billion	0.06	$11.86 billion	($0.03)	-378.57
Walker & Dunlop	$1.19 billion	2.47	$108.17 million	$3.24	26.66

Freddie Mac has higher revenue and earnings than Walker & Dunlop. Freddie Mac is trading at a lower price-to-earnings ratio than Walker & Dunlop, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Freddie Mac has a beta of 2.09, meaning that its stock price is 109% more volatile than the S&P 500. Comparatively, Walker & Dunlop has a beta of 1.59, meaning that its stock price is 59% more volatile than the S&P 500.

Summary

Walker & Dunlop beats Freddie Mac on 10 of the 14 factors compared between the two stocks.

About Freddie Mac

Federal Home Loan Mortgage Corporation operates in the secondary mortgage market in the United States. It operates through two segments, Single-Family and Multifamily. The Single-Family segment purchases, securitizes, and guarantees single-family loans; and manages single-family mortgage credit and market risk, as well as manages mortgage-related investments portfolio, single-family securitization activities, and treasury functions. This segment serves mortgage banking companies, commercial banks, regional banks, community banks, credit unions, housing finance agencies, savings institutions, and non-depository financial institutions. The Multifamily segment engages in the purchase, securitization, and guarantee of multifamily loans; issuance of multifamily K certificates; manages multifamily mortgage credit and market risk; and invests in multifamily loans and mortgage-related securities. It serves banks and other financial institutions, insurance companies, money managers, hedge funds, pension funds, state and local governments, and broker dealers. Federal Home Loan Mortgage Corporation incorporated in 1970 and is headquartered in McLean, Virginia.

About Walker & Dunlop

Walker & Dunlop, Inc. is a holding company, which engages in the provision of commercial real estate and finance services. It operates through the following segments: Capital Markets, Servicing and Asset Management, and Corporate. The Capital Markets segment offers a comprehensive range of commercial real estate finance products to customers. The Servicing and Asset Management segment includes servicing and asset-managing and managing third-party capital investments. The Corporate segment consists primarily of the company’s treasury operations and other corporate-level activities. The company was founded by Oliver Walker and Laird Dunlop in 1937 and is headquartered in Bethesda, MD.