Freddie Mac (FMCC): Losses Deepen 48.5% Annually, Undercutting Bullish Value Narratives

Federal Home Loan Mortgage (FMCC) reported that it remains unprofitable, with losses deepening at a steep 48.5% annual pace over the past five years. Revenue is projected to grow at just 2.7% annually, trailing the broader US market’s 10.3% average. Despite continued losses, FMCC’s shares trade at $9.53, notably below the estimated fair value of $54.14. Its low Price-to-Sales Ratio suggests potential value for investors willing to weigh the ongoing operational challenges against valuation signals.

See our full analysis for Federal Home Loan Mortgage.

The real test is how these numbers stack up against the prevailing market narratives. Some views will be reinforced while others could be challenged in the sections ahead.

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Losses Growing Faster Than Sales

• FMCC's annual losses have accelerated at a striking 48.5% pace over the past five years, far outpacing its revenue growth of just 2.7% each year.
• Prevailing market view highlights that this ongoing unprofitability overshadows modest sales growth, making it difficult for bulls to argue for a turnaround while operational headwinds remain so persistent.
  • Analysts point to the revenue trend as a sign FMCC still retains a functioning core business, yet the rapidly compounding losses reinforce the challenge for any near-term reversal.
  • While repeated losses do not surprise cautious investors, the sheer scale of the gap between loss expansion and sales momentum is sharper than many sector peers face, calling bullish rebound hopes into question.

Peer Discount Signals “Trapped Value”

• FMCC is trading at a Price-to-Sales Ratio of 1.3x, much lower than the US Diversified Financial industry average of 2.4x and well below the peer group’s 4.1x.
• The prevailing market view emphasizes that investors see FMCC as a “deep value” candidate, with price multiples suggesting a glaring disconnect between core valuation and share price.
  • The 1.3x ratio stands out in a sector where similar companies command nearly triple the multiple. This supports the notion that market participants anticipate future positives or policy-driven rerating.
  • However, the persistent losses and lack of stable profitability keep many on the sidelines, as the market appears reluctant to close the gap until operational risk subsides.

DCF Gap Underscores Policy Overhang

• The stock trades at $9.53, which is deeply discounted relative to its DCF fair value estimate of $54.14. This figure highlights how regulatory and profit concerns drive FMCC's valuation far beneath modeled fundamentals.
• The prevailing market view notes that investors focus acutely on this disconnect, treating FMCC as a policy play rather than a pure financial stock.
  • The hefty DCF discount draws speculative interest when legislative or regulatory chatter heats up, but also amplifies the downside if no progress materializes.
  • Most see the spread as a “valuation overhang” unless clear steps are taken to address the operational losses or clarify the government’s stance on GSE reform.

Curious how numbers become stories that shape markets? Explore Community Narratives

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Federal Home Loan Mortgage's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

FMCC’s persistent losses are growing much faster than its modest revenue gains. This highlights a lack of stable earnings and reliable growth momentum.

If uncertain performance and widening losses concern you, check out stable growth stocks screener (2103 results) to discover companies with consistent results and a stronger track record of steady success.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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