Federal Agricultural Mortgage Corporation (AGM) | Investment Case

1. Company Snapshot

1.a. Company Description

Federal Agricultural Mortgage Corporation provides a secondary market for various loans made to borrowers in the United States.It operates through four segments: Farm & Ranch, USDA (United States Department of Agriculture) Guarantees, Rural Utilities, and Institutional Credit.The Farm & Ranch segment purchases and retains eligible mortgage loans that are secured by first liens on agricultural real estate; securitizes eligible mortgage loans, and guarantees the timely payment of principal and interest on securities representing interests in or obligations secured by pools of mortgage loans; and issues long-term standby purchase commitments (LTSPC) on designated eligible mortgage loans.

The USDA Guarantees segment purchases portions of certain agricultural and rural development loans guaranteed by the USDA.The Rural Utilities segment purchases and guarantees securities that are backed by loans for electric or telecommunications facilities by lenders organized as cooperatives to borrowers; and purchases eligible rural utilities loans and guarantees of securities backed by those loans, as well as LTSPCs for pools of eligible rural utilities loans.The Institutional Credit segment guarantees and purchases general obligations of lenders and other financial institutions that are secured by pools of loans eligible under the Farmer Mac's Farm & Ranch, USDA Guarantees, or Rural Utilities lines of business.

Federal Agricultural Mortgage Corporation was founded in 1987 and is headquartered in Washington, District of Columbia.

Show Full description

1.b. Last Insights on AGM

The recent negative drivers behind Federal Agricultural Mortgage Corporation's performance include weak Q4 earnings, missing analyst estimates at $3.97 per share, a decline from $4.10 per share in the same period last year. The company's net interest income increased, but this growth was not enough to offset the decline in earnings. Additionally, the rise in non-accruing loans and the company's preference for conservative lending practices may have contributed to the weak earnings.

1.c. Company Highlights

Last Price	175.89
Change Percentage	-0.58%
Open	175
Previous Close	176.92
Market Cap ( Millions)	1918
Volume	53581
Year High	217.14
Year Low	155
M A 50	164.83
M A 200	182.28

FCF Yield	17.94%
Dividend Yield	3.35%
ROE	13.83%
Debt / Equity	1730.61%
Net Debt / EBIDTA	6332.95%
Price To Book	1.14
Price Earnings Ratio	8.9
Price To FCF	5.57
Price To sales	1.3
EV / EBITDA	67.62

2. Farmer Mac's Q3 2025 Earnings: A Strong Performance

Farmer Mac reported a strong financial performance in Q3 2025, with core earnings reaching $49.6 million, surpassing expectations. The company's net effective spread grew to $97.8 million, driven by higher average loan balances and a shift to higher spread business. The earnings per share (EPS) came in at $4.52, beating estimates of $4.43. The company's revenue growth is expected to continue, with analysts estimating a 9.4% growth in revenues for the next year.

Publication Date: Nov -12

                                    📋 Highlights
                                    Record Financial Performance::
                                                Achieved $97.8M net effective spread and $49.6M core earnings in Q3 2025, with YTD totals of $287M and $143M, reflecting double-digit YoY growth.
Infrastructure Finance Growth::
                                                Infrastructure portfolio expanded to $11B (+$600M QoQ), driven by data centers, broadband, and renewable energy, while Broadband Infrastructure doubled YoY to $1.3B.
Strategic Diversification::
                                                Portfolio shifted toward high-spread sectors like renewable energy, corporate Ag finance, and securitized broadband, enhancing resilience across market cycles.
Financial Health Metrics::
                                                Maintained 17% core return on equity, efficiency ratio below 30%, and robust capital base post-$5M preferred stock issuance, supporting long-term growth.

                                

Segment Performance

The growth in Farmer Mac's portfolio was primarily driven by the infrastructure finance line of business, which grew by $600 million to $11 billion as of quarter end. The Broadband Infrastructure segment doubled year-over-year to $1.3 billion, reflecting continued strong interest in investment in data centers, broadband expansion, and renewable energy projects. As Zachary Carpenter noted, "Our team delivered another solid quarter of outstanding business volume growth, with $500 million of net new business volume, resulting in total outstanding business volume of $31.1 billion as of quarter end."

Asset Quality and Credit Profile

Farmer Mac's asset quality metrics remain strong, with a slight drag from nonaccrual loans, which are expected to cure and result in future interest income. The company's allowance for loan losses is tiny compared to other financial institutions, and it has seen low levels for many quarters. The provision for loan losses in the quarter was $7.4 million, a mix of growth and the impact of groundwater regulations in California.

Valuation and Outlook

Farmer Mac's current Price-to-Tangible Book Value (P/TBV) is around 1.07, indicating a relatively reasonable valuation. The company's Net Interest Margin (NIM) has been strong, driven by the growth in rural infrastructure, which is one of the most accretive segments. With a Dividend Yield of 3.56%, Farmer Mac offers an attractive return for income investors. As the company continues to grow and diversify its portfolio, it is well-positioned to deliver on its multiyear strategy with strong liquidity and capital levels.

3. NewsRoom

Farmer Mac Closes $313.5 Million Securitization of Agricultural Mortgage-Backed Securities (AMBS)

Dec -03

Source: prnewswire.com

Federal Agricultural Mortgage: I'm Sticking To A 'Strong Buy' Rating

Nov -13

Source: seekingalpha.com

Farmer Mac Declares Quarterly Dividends on Common and Preferred Stock

Nov -05

Source: prnewswire.com

Federal Agricultural Mortgage (AGM) Beats Q3 Earnings and Revenue Estimates

Nov -04

Source: zacks.com

Federal Agricultural Mortgage Corporation (AGM) Q3 2025 Earnings Call Transcript

Nov -04

Source: seekingalpha.com

Farmer Mac Reports Third Quarter 2025 Results

Nov -03

Source: prnewswire.com

Federal Agricultural Mortgage (AGM) Earnings Expected to Grow: What to Know Ahead of Next Week's Release

Oct -27

Source: zacks.com

2 Set And Forget 6% QDI-Paying Picks

Oct -20

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.55%)

6. Segments

Farm & Ranch

Expected Growth: 5.5%

The 5.5% growth in Farm & Ranch segment of Federal Agricultural Mortgage Corporation is driven by increasing demand for agricultural loans, favorable interest rates, and government support for rural development. Additionally, rising farm incomes, expanding agricultural exports, and growing demand for sustainable farming practices contribute to the segment's growth.

Funding

Expected Growth: 5.8%

The 5.8% growth in funding from Federal Agricultural Mortgage Corporation is driven by increasing demand for agricultural loans, government support for rural development, and low interest rates. Additionally, the corporation's expansion into new markets and improved operational efficiency have contributed to its growth.

Corporate AgFinance

Expected Growth: 5.2%

The 5.2% growth in Corporate AgFinance from Federal Agricultural Mortgage Corporation is driven by increasing demand for agricultural loans, favorable interest rates, and government support for rural development. Additionally, the corporation's diversified portfolio and strong risk management practices have contributed to its growth. Furthermore, the growing need for agricultural infrastructure and technology advancements have also fueled the segment's expansion.

Rural Utilities

Expected Growth: 4.8%

The 4.8% growth in Rural Utilities from Federal Agricultural Mortgage Corporation is driven by increasing demand for rural infrastructure development, government initiatives to enhance rural electrification, and rising investments in renewable energy sources. Additionally, the corporation's diversified loan portfolio and favorable interest rate environment contribute to its growth.

Renewable Energy

Expected Growth: 7.0%

Federal Agricultural Mortgage Corporation's 7.0% growth in Renewable Energy is driven by increasing demand for clean energy, government incentives, and declining technology costs. Additionally, the corporation's focus on rural areas and agricultural communities, where renewable energy can provide economic benefits, contributes to its growth. Furthermore, the corporation's access to low-cost capital and its expertise in agricultural lending also support its expansion in the renewable energy sector.

Reconciling Items

Expected Growth: 4.5%

The 4.5% growth of Federal Agricultural Mortgage Corporation is driven by increasing demand for agricultural loans, expansion of rural lending programs, and favorable interest rates. Additionally, the corporation's diversified portfolio and strong risk management practices have contributed to its growth. Furthermore, government support for agricultural development and increasing investments in rural infrastructure have also boosted the corporation's growth.

Investments

Expected Growth: 5.0%

The 5.0% growth in investments from Federal Agricultural Mortgage Corporation is driven by increasing demand for agricultural loans, government support for rural development, and a growing need for farm credit. Additionally, the corporation's diversified loan portfolio and risk management strategies have contributed to its stable financial performance, attracting more investors and fueling growth.

Corporate

Expected Growth: 4.2%

Federal Agricultural Mortgage Corporation's 4.2% growth is driven by increasing demand for agricultural loans, government support for farmers, and a strong rural economy. Additionally, the corporation's diversified loan portfolio and effective risk management strategies have contributed to its growth. Furthermore, the low-interest-rate environment has also boosted loan demand, supporting the corporation's expansion.

7. Detailed Products

Farmer Mac MBS

Mortgage-backed securities (MBS) guaranteed by Farmer Mac, providing liquidity to agricultural lenders and investors

AgVantage

Agricultural loan purchase program for rural utilities and lenders, providing financing for agricultural and rural development

Rural 1st

Agricultural mortgage loan program for rural homeowners, providing financing for rural housing and property development

Farm & Ranch

Agricultural loan program for farmers and ranchers, providing financing for agricultural operations and land acquisition

Timber

Timberland loan program for timberland owners, providing financing for timberland acquisition and management

8. Federal Agricultural Mortgage Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes is low for Federal Agricultural Mortgage Corporation as the company operates in a niche market with limited alternatives.

Bargaining Power Of Customers

The bargaining power of customers is medium as Federal Agricultural Mortgage Corporation has a diverse customer base, but some customers may have significant bargaining power due to their size and volume of business.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low as Federal Agricultural Mortgage Corporation has a diverse supplier base and is not heavily dependent on any single supplier.

Threat Of New Entrants

The threat of new entrants is low as Federal Agricultural Mortgage Corporation operates in a highly regulated industry with significant barriers to entry.

Intensity Of Rivalry

The intensity of rivalry is medium as Federal Agricultural Mortgage Corporation operates in a competitive market, but has a strong market position and competitive advantages.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	95.19%
Debt Cost	4.82%
Equity Weight	4.81%
Equity Cost	9.41%
WACC	5.04%
Leverage	1978.81%

11. Quality Control: Federal Agricultural Mortgage Corporation passed 4 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Runway Growth Finance

A-Score: 7.7/10

Value: 7.5

Growth: 8.3

Quality: 7.0

Yield: 10.0

Momentum: 4.0

Volatility: 9.3

1-Year Total Return ->

Medallion Financial

A-Score: 7.0/10

Value: 8.9

Growth: 7.7

Quality: 5.6

Yield: 7.0

Momentum: 7.0

Volatility: 6.0

1-Year Total Return ->

Barings BDC

A-Score: 6.8/10

Value: 6.4

Growth: 5.1

Quality: 6.3

Yield: 10.0

Momentum: 3.0

Volatility: 10.0

1-Year Total Return ->

Navient

A-Score: 6.3/10

Value: 9.6

Growth: 5.0

Quality: 5.6

Yield: 8.0

Momentum: 3.0

Volatility: 6.3

1-Year Total Return ->

Farmer Mac

A-Score: 6.1/10

Value: 6.2

Growth: 8.3

Quality: 4.6

Yield: 7.0

Momentum: 3.0

Volatility: 7.7

1-Year Total Return ->

Oaktree Specialty Lending

A-Score: 5.8/10

Value: 5.6

Growth: 2.7

Quality: 5.5

Yield: 10.0

Momentum: 1.5

Volatility: 9.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

4.93%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

5.04%

Federal Agricultural Mortgage Corporation - US3131483063

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on AGM

1.c. Company Highlights

Higher Growth

Stable Momentum

Average Yield

Earnings Miss

Revenues Beats

Fairly Valued

Revenues Miss

Expensive

Average Quality

Medium Volatility

Earnings Beats

Lower Quality

Weak Momentum

2. Farmer Mac's Q3 2025 Earnings: A Strong Performance

Segment Performance

Asset Quality and Credit Profile

Valuation and Outlook

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.55%)

6. Segments

Farm & Ranch

Expected Growth: 5.5%

Funding

Expected Growth: 5.8%

Corporate AgFinance

Expected Growth: 5.2%

Rural Utilities

Expected Growth: 4.8%

Renewable Energy

Expected Growth: 7.0%

Reconciling Items

Expected Growth: 4.5%

Investments

Expected Growth: 5.0%

Corporate

Expected Growth: 4.2%

7. Detailed Products

Farmer Mac MBS

AgVantage

Rural 1st

Farm & Ranch

Timber

8. Federal Agricultural Mortgage Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Federal Agricultural Mortgage Corporation passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

12.e Scoring ^Insights

12.f DCF ^BETA