loanDepot (NYSE:LDI) vs. Fannie Mae (OTCMKTS:FNMA) Critical Analysis

loanDepot (NYSE:LDI) and Fannie Mae (OTCMKTS:FNMA) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, institutional ownership, valuation, risk and profitability.

Analyst Recommendations

This is a summary of recent recommendations and price targets for loanDepot and Fannie Mae, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
loanDepot	1	2	0	0	1.67
Fannie Mae	1	1	0	0	1.50

loanDepot currently has a consensus price target of $2.30, indicating a potential downside of 21.10%. Fannie Mae has a consensus price target of $7.00, indicating a potential downside of 44.44%. Given loanDepot’s stronger consensus rating and higher probable upside, research analysts clearly believe loanDepot is more favorable than Fannie Mae.

Volatility and Risk

loanDepot has a beta of 3.38, suggesting that its share price is 238% more volatile than the S&P 500. Comparatively, Fannie Mae has a beta of 2.07, suggesting that its share price is 107% more volatile than the S&P 500.

Institutional and Insider Ownership

39.4% of loanDepot shares are held by institutional investors. Comparatively, 0.0% of Fannie Mae shares are held by institutional investors. 78.1% of loanDepot shares are held by insiders. Comparatively, 1.0% of Fannie Mae shares are held by 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.

Profitability

This table compares loanDepot and Fannie Mae’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
loanDepot	-5.95%	-19.41%	-1.53%
Fannie Mae	9.68%	-34.69%	0.35%

Earnings and Valuation

This table compares loanDepot and Fannie Mae”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
loanDepot	$1.06 billion	0.91	-$98.33 million	($0.33)	-8.83
Fannie Mae	$152.67 billion	0.10	$16.98 billion	N/A	N/A

Fannie Mae has higher revenue and earnings than loanDepot.

Summary

loanDepot beats Fannie Mae on 7 of the 11 factors compared between the two stocks.

About loanDepot

loanDepot, Inc. engages in originating, financing, selling, and servicing residential mortgage loans in the United States. The company offers conventional agency-conforming and prime jumbo, federal assistance residential mortgage, and home equity loans. It also provides settlement services, which include captive title and escrow business; real estate services that cover captive real estate referral business; and insurance services, including services to homeowners, as well as other consumer insurance policies. The company was founded in 2010 and is headquartered in Irvine, California.

About Fannie Mae

Federal National Mortgage Association provides financing solutions for mortgages in the United States. It operates through two segments, Single-Family and Multifamily. The Single-Family segment securitizes and purchases single-family fixed-rate or adjustable-rate, first-lien mortgage loans, or mortgage-related securities backed by these loans; and loans that are insured by Federal Housing Administration, loans guaranteed by the Department of Veterans Affairs and Rural Development Housing and Community Facilities Program of the U.S. Department of Agriculture, manufactured housing mortgage loans, and other mortgage-related securities. The Multifamily segment securitizes multifamily mortgage loans into Fannie Mae mortgage backed securities (MBS); purchases multifamily mortgage loans; and provides credit enhancement for bonds issued by state and local housing finance authorities to finance multifamily housing. This segment also issues structured MBS backed by Fannie Mae multifamily MBS; buys and sells multifamily agency mortgage-backed securities; and invests in low-income housing tax credit multifamily projects. Federal National Mortgage Association was founded in 1938 and is based in Washington, the District of Columbia.