Why Federal Agricultural Mortgage Earnings Matter For Shareholders

Federal Agricultural Mortgage (AGM) drew investor attention after reporting second quarter 2026 net income of US$66.95 million and basic earnings per share from continuing operations of US$5.43, compared with US$54.84 million and US$4.50 a year earlier.

Federal Agricultural Mortgage’s recent earnings release has arrived alongside a strong run in the stock, with a 30 day share price return of 18.30% and a year to date share price return of 34.29%. The 5 year total shareholder return of 178.21% shows longer term holders have also been rewarded as momentum has built over recent months.

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Federal Agricultural Mortgage’s earnings have moved in step with the share price lately, which raises a key question. Is the recent jump mainly recognition of the business performance, or is sentiment now running ahead of fundamentals?

Price-to-Earnings of 12.9x: Is It Justified For Federal Agricultural Mortgage?

Federal Agricultural Mortgage currently trades on a P/E of 12.9x, which sits above its immediate peer average yet below both the wider US market and its own estimated fair level.

The P/E ratio compares the company’s share price with its earnings per share. For a lender focused on agricultural and rural infrastructure finance like Federal Agricultural Mortgage, this multiple is a quick way to see how much investors are paying for each dollar of earnings, taking into account its 1 year total return of 42.70% and 5 year total shareholder return of 178.21%.

At 12.9x earnings, the stock is described as expensive relative to its closest peer group average of 11.9x. That suggests investors are currently paying a premium against peers for AGM’s earnings, even though recent earnings growth of 7.4% over the past year sits below its own 5 year earnings growth rate of 11.1% per year.

Compared with the broader US Diversified Financial industry average P/E of 16.8x and the US market P/E of 19.5x, Federal Agricultural Mortgage is characterized as good value. The estimated fair P/E of 13.3x is also slightly higher than the current 12.9x, which points to a modest gap that the market could close if sentiment toward the stock and its earnings profile remains similar.

Explore the SWS fair ratio for Federal Agricultural Mortgage.

Result: Price-to-Earnings of 12.9x (ABOUT RIGHT)

However, Federal Agricultural Mortgage still faces risks if agricultural credit quality weakens or if funding costs shift in a way that compresses its current earnings profile.

Another View On Federal Agricultural Mortgage’s Valuation

The earlier section suggested Federal Agricultural Mortgage looks roughly in line with a fair P/E of 13.3x. Our DCF model presents a different perspective. At a share price of $236.92 compared with an estimated future cash flow value of $149.21, the stock appears overvalued using this method. Which signal do you give more weight to as an investor?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Federal Agricultural Mortgage for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 51 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Given the mixed signals around Federal Agricultural Mortgage, this is a moment to look at the underlying data yourself and decide how comfortable you feel with the current risk and reward balance. To see the full breakdown of both sides of that story, take a closer look at the 4 key rewards and 1 important warning sign.

Looking For More Investment Ideas Beyond Federal Agricultural Mortgage?

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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.