AGM Stock Study (5-15-26)

Posted by Mark on May 11, 2026 at 07:49 | Last modified: May 15, 2026 08:36

I recently did a stock study on Federal Agricultural Mortgage Corp. (AGM, $175.71).

M* writes:

     > Federal Agricultural Mortgage Corp provides agricultural real estate
     > and rural housing mortgage loans in the secondary market in the
     > U.S. Its operations consist of seven reportable segments: Farm &
     > Ranch, which generates maximum revenue, Corporate AgFinance,
     > Power & Utilities, Broadband Infrastructure, Renewable Energy,
     > Funding, and Investments. The company purchases eligible
     > mortgage loans secured by first liens on agricultural real estate
     > and rural housing under the Farm & Ranch line of business. Its
     > subsidiary purchases portions of certain agricultural, rural
     > development, business and industry, and community facilities
     > loans guaranteed by the USDA. Geographically, the company’s
     > operations are spread across different regions in the U.S.

Over the past decade, this small-size company grows sales and EPS at annualized rates of 11.8% and 13.0%, respectively. Lines are mostly up, straight, and parallel except for EPS dips in ’19 and ’20. Five-year EPS R^2 is 0.77 and Value Line (VL) gives an Earnings Predictability score of 90. Shares outstanding increase 2.8% (0.3%/year).

Over the past decade, PTPM leads peer and industry averages despite falling from 74.3% to 62.6% (’25) with a 5-year mean of 69.3%. ROE is roughly equal to peer and industry averages while ranging from 14.3% in ’17 to 20.0% in ’22 with a 5-year mean of 17.3% (shareholder equity consistently positive and increasing 13.1% per year on average). Debt-to-Capital is greater than peer and industry averages ranging from 95.1% in ’23 to 96.3% in ’19 with a 5-year mean of 95.2%.

M* assigns a D grade for Financial Health (per BetterInvesting® website) and VL a C++ rating for Financial Strength. These are lower than any stock study I can recall doing but I think require additional context for proper understanding.

According to Google AI, AGM (Farmer Mac) is functionally treated as “too big to fail” like the largest Wall Street banks. Created by Congress via the Agricultural Credit Act of 1987, AGM exists to provide liquidity to rural America as a Government-Sponsored Enterprise (GSE). Like Fannie Mae and Freddie Mac, Wall Street operates under an implied guarantee that the U.S. government would step in to prevent a default to protect the broader financial system. AGM is allowed to borrow up to $1.5B from the U.S. Treasury to fulfill its obligations in an extreme liquidity crisis. AGM also acts as the secondary market for agricultural mortgages and rural infrastructure; its survival is a matter of national food security to avoid collapsing credit availability for American farmers, food supply chains, and rural utilities.

AGM maintains a strong 13.6% Tier 1 capital ratio that means it holds a secure capital buffer to cover potential asset losses beyond its debt obligations. It also historically targets and maintains a net effective spread (interest income generated relative to funding costs) between 0.90% and 1.15% across its total outstanding business volume.

With regard to sales growth:

• YF gives YOY ACE 12.2% and 12.6% for ’26 and ’27 (based on 2 analysts).
• Zacks also gives YOY ACE of 12.2% and 12.6% for ’26 and ’27, respectively (2 analysts).
• CFRA gives ACE 12.2% YOY and 12.4%/year for ’26 and ’25-’27, respectively (2).
• M* gives 2-year-annualized ACE of 12.6%.

My 9.0% annualized forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 11.0% YOY and 10.2% per year for ’26 and ’25-’27 (based on 2 analysts).
• Nasdaq.com gives ACE 9.6% YOY for ’27 (2 analysts).
• Seeking Alpha projects 4-year annualized growth of 11.0%.
• YF gives YOY ACE 17.2% and 9.4% for ’26 and ’27, respectively (2).
• Zacks gives YOY ACE 18.6% and 9.6% for ’26 and ’27, and 5-year annualized of 11.0% (2).
• VL gives 5-year annualized ACE of 11.0% (2).
• CFRA gives ACE 18.8% YOY and 12.3% per year for ’26 and ’25-’27, respectively (2).
• M* gives long-term ACE of 11.0%.

I suspect data duplication because all estimates cite two analysts and are exactly the same. My 9.0% forecast is therefore a slight haircut to the 11% given. Initial value is ’25 EPS of $16.62/share rather than 2026 Q1 $17.38 (TTM).

My Forecast High P/E is 9.0. Over the past 10 years, high P/E ranges from 9.4 in ’22 to 13.8 in ’21 with a 5-year mean of 12.4 and a 5-year mean average P/E of 10.2. I am below the range.

My Forecast Low P/E is 7.0. Over the past 10 years, low P/E increases from 4.4 to 9.3 (’25) with a last-5-year mean of 8.1. I am forecasting at the 10-year median.

My Low Stock Price Forecast (LSPF) of $121.70 is default based on initial value from above. That is 30.7% less than previous close and 10.9% less than the 52-week low.

Over the past 10 years, Payout Ratio (PR) increases from 17.4% to 36.1% (’25) with a last-5-year mean of 32.2%. My 26.0% forecast is lowest since ’17 (21.8%).

These inputs land AGM in the HOLD zone with a U/D ratio of 1.2. Total Annualized Return (TAR) is 9.0%.

PAR (using Forecast Average—not High—P/E) of 6.9% is less than I seek for a small-size company. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR instead.

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Based on only 11 studies done in the past 90 days (3 outliers including mine excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 10.6%, 10.8%, 11.6, 7.8, and 32.2%. While this sample size only permits anecdotal comparison, I am lower across the board.

MS high / low EPS are $28.01/ $16.64 versus my $25.57 / $17.38 (per share). My high EPS is less due to a lower growth rate.

MS LSPF of $125.40 implies a Forecast Low P/E of 7.2: less than the above-stated 7.5. MS LSPF is 3.4% less than the default $16.64/share * 7.8 = $129.79 that results in more conservative zoning. MS LSPF exceeds mine by 3.0%, however.

MOS is robust in this study because most of my inputs are less than historical/analyst/MS averages/ranges (Forecast Low P/E excepted). In support of the MOS is MS TAR exceeding mine by 7.6% per year [possibly too high].

Regarding valuation, PEG is 0.79 and 1.0 per Zacks and my projected P/E, respectively: slightly undervalued (M* has 0.86). Relative Value [(current P/E) / 5-year-mean average P/E] is fair at 0.97. M* has stock trading at a 22% discount.

Per U/D, AGM is a BUY around $148.50/share. Given a forecast high price ~$230, BetterInvesting® TAR criterion would be met [230.1 / ((11.97 / 100 ) +1 ) ^ 5] ~ $131.

A 90-day free trial to BetterInvesting® may be secured here (also see link under “Pages” section at top right of this page).