FEDERAL AGRICULTURAL MORTGAGE CORPORATION (AGM): what the price assumes

boothcheck covers FEDERAL AGRICULTURAL MORTGAGE CORPORATION (AGM) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-07-25.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/AGM

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

How unusual the bet is: n/a

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 4.3%); the inversion above states its own rate.

Per-Model Detail (n=10)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Farmer Mac runs a chartered secondary market for farm and rural infrastructure credit, earning a spread on what it holds plus a guarantee fee its Charter "caps at 50 basis points per year", so volume rather than pricing does the compounding.
• Infrastructure lending now carries roughly 18% of revenue across power and utilities, broadband and renewable energy, and the company's own underwriting language concedes that standards in those lines "reflect the increased credit risk inherent in these sectors."
• Second-quarter results arrive July 30, and the agricultural credit cycle is the thing to watch, because farmland collateral values and 2026 export demand set the loss curve on the largest segment.

Bull Case

The obvious objection to owning a lender to American agriculture in 2026 is that American agriculture is having a hard year, and Farmer Mac says so in its own filing. The 10-K describes "a tightening agricultural economy is creating the need for more liquidity and working capital for borrowers managing through this agricultural cycle" and reports that "The current USDA forecast shows U.S. agricultural exports dropping modestly in 2026." Any bull case has to start there, because that is the objection a reader arrives with.

What survives the objection is the structure. Farmer Mac does not originate loans and does not chase borrowers. It approves lenders into its programs and then buys or guarantees paper those lenders have already written, against collateral the Charter defines narrowly: obligations "secured by a first lien mortgage on real estate used in agricultural production or processing", underwritten to standards that require the company to "confirm that the borrower is or will be actively engaged in agricultural production." A first lien on farmland worked by the person who pledged it is about as unglamorous as credit gets. In a tightening farm economy that exposure tends to show up first as demand for more credit, which is revenue, and only much later in the loss curve.

Meanwhile the growth is arriving from somewhere else entirely. The company describes the newer line plainly: "Our Infrastructure Finance line of business encompasses purchases of Power & Utilities, Broadband Infrastructure, and Renewable Energy obligations as well as LTSPCs for pools of eligible Power & Utilities loans." Those three segments together are about 18% of revenue, and the 10-K ties the opportunity to "modernization of existing and new infrastructure, as well as increasing demand for electricity across the spectrum of residential, commercial, and industrial customers." Rural electric cooperatives are raising capital for the same reason every other utility is. Farmer Mac was already their lender, which means the electricity build-out reaches it through relationships it did not have to buy.

The result is a growth rate that stands out in unglamorous company. Trailing revenue is running about 12% above the prior year. In the same cohort of established spread lenders, Fannie Mae's top line was essentially flat year over year and SLM's grew a little over 2%. Farmer Mac is compounding several times faster than the mature end of its peer group while running a book that looks more like theirs than like a consumer lender's.

That growth also reaches shareholders rather than getting diluted on the way. Share count has risen at about a tenth of a percent a year over the four years to March 2026, which is to say it has not moved. Book value works out to $157.21 a share, and the business generates about a 12.6% return on equity against a 9.3% cost of equity. Capital sits well ahead of the regulatory floor: core capital was $1.7 billion against a $1.1 billion minimum at the end of the March quarter. The 10-K attributes the recent widening of that cushion to "the issuance of the Series H preferred stock noted above and an increase in retained earnings." Retained earnings doing part of the work is the tell. A lender that funds its own capital growth does not have to ask common holders for more of it.

Bear Case

The charter is the moat, and the charter does not cover where the growth is going. In farm real estate Farmer Mac has a genuine structural advantage: a congressionally defined universe of eligible loans, first-lien collateral, and an approved-lender network that brings the paper to it rather than the other way round. None of that applies to a broadband operator or a solar developer. In Infrastructure Finance the company underwrites the way any commercial bank does, "evaluating the borrower's capital expenditures, customer/subscriber growth, market share, and competition", and in Corporate AgFinance it is "assessing the borrower's leverage, cash flows, liquidity, revenue and margin trends, as well as evaluating the" rest of the credit. The 10-K states the consequence without varnish: underwriting standards in these segments "reflect the increased credit risk inherent in these sectors."

That is not a small corner of the business. Corporate AgFinance, power and utilities, broadband and renewable energy together account for about 27% of revenue, against 37% for Farm & Ranch, and the corporate side is the part growing. Every point of mix that moves from first-lien farmland toward corporate cash-flow lending is a point where the charter stops helping and ordinary credit judgment takes over. Farmer Mac is priced as a chartered franchise and is increasingly underwriting as a specialty commercial lender.

The fee income compounds that. Under a long-term standby purchase commitment the company does not merely insure the loan, it agrees to buy it "at par when a loan becomes either 90 days or 120 days delinquent (depending on the agreement) or is in material non-monetary default." In benign years that promise costs nothing and the fee drops through. In a bad one, paper that sat off the balance sheet arrives on it at full face value at precisely the moment collateral is worth less. The 10-K names the same chain: "A decline in the value of collateral securing loans in our portfolio or a decline in the value of our borrowers could increase the probability of loss in the event of default, which could have a material adverse effect on our financial condition, results of operations, liquidity," and capital.

Now put a number on the assumption. Shareholders' equity amounts to $157.21 per share, and owners are paying a good deal more than that. The reason is a return on equity of about 12.6% set against a cost of equity nearer 9.3%. Roughly three points of surplus return, capitalized, is the whole of the difference. Nothing about that spread is contractual. Credit costs run below normal at this point in a cycle the company itself calls tightening, the guarantee fee is capped by Charter at 50 basis points a year so it cannot be widened to offset a worse loss rate, and the mix is shifting toward the segments where losses, when they come, are larger. If the return on equity drifts back toward what shareholders require, the premium to book has nothing left to stand on.

One more structural point sits underneath all of it. Farmer Mac has no deposits. It funds a book of this size by continuously issuing debt into the wholesale market, and the 10-K lists among the external conditions that could materially hurt results "disruptions in the debt or equity capital markets". That is the one input management does not control and cannot hedge away.

The honest concession is that none of this is a valuation argument. Book value plus profitability, conservative earnings screens and peer multiples all land at or above today's price; the forward cash-flow read is the only one sitting slightly beneath it. The bear case is not that the yardsticks say expensive. It is that every one of those yardsticks measures a credit book at a favorable point in a cycle, and the fastest-growing part of that book is the part the charter was never written to protect.

Valuation

Start with what today's price is actually asking for. At $209.31 the market is paying for the earning power Farmer Mac shows now to persist for roughly eleven more years without stepping down. Among companies that have grown at a comparable pace, only about one in seven kept it going across a full decade. That makes the requirement demanding rather than heroic, and it is the single assumption everything else rests on.

Measured against the standard yardsticks, the shares are not stretched. Book value plus profitability methods and conservative earnings-power screens both land above the price. Peer multiples land essentially on top of it. The forward cash-flow read is the only one that sits slightly under the price, which is the reverse of the usual arrangement: here the static, asset-anchored methods are the generous ones and the growth-based method is the cautious one. That is the signature of a value-supported financial rather than a growth bet, and it is why the argument about this stock is a credit argument rather than a multiple argument.

Book value is the cleanest lens on the bet. Equity on the books amounts to $157.21 for every share outstanding, and owners are paying well clear of it. That distance is there because the business generates about a 12.6% return on equity, set against a 9.3% cost of equity for its owners. Capitalize roughly three points of surplus return and you have accounted for essentially the whole of the difference. Every bull and bear argument above is, underneath, an argument about whether that three-point spread survives the cycle.

Capital adequacy here is a formula rather than a judgment. The Charter requires core capital, which the 10-K defines as "stockholders' equity less accumulated other comprehensive income", of at least "2.75% of our aggregate on-balance sheet assets, as calculated for regulatory purposes, plus 0.75% of our aggregate off-balance sheet obligations". At the end of the March quarter core capital stood at $1.7 billion against a $1.1 billion requirement. Worth reading the composition precisely: the 10-K credits the recent increase in the surplus to "the issuance of the Series H preferred stock noted above and an increase in retained earnings", so part of the cushion is preferred capital that common holders fund out of dividends before any earnings reach them.

On the revenue side the ceiling is written into the Charter, which caps the guarantee fee "at 50 basis points per year." Farmer Mac cannot widen its take. It can only lend and guarantee more, which is why volume is the number that decides the next several years. Trailing revenue growth near 12% reads well against a cohort where Fannie Mae's line was roughly flat and SLM's grew a little over 2%, and the share count has been effectively unchanged for four years, so that growth lands per share instead of being spread thinner. Funding, though, comes from the wholesale debt markets rather than from deposits. That is the structural condition of the business, not a weakness in it, and it is also the one variable the company cannot set for itself.

Catalysts

Results for the quarter ended June 30 arrive on July 30 after the close, with a call the same afternoon. The March quarter set the bar. Net income was $59.1 million against $49.7 million a year earlier, or $4.75 a share for the quarter against $4.01, on revenue of $109.9 million, up 14% from the prior-year quarter, which the company described as 99% recurring net effective spread and fee income.

Volume is the line that matters most in the July report, because the fee side is capped by Charter and the spread side moves slowly. Outstanding business volume finished March at $34.8 billion, up 17% year over year, while core capital stood at $1.7 billion against a $1.1 billion minimum, a surplus of $663.2 million, and the investment portfolio covered an average of 301 days of liquidity. Growth at that rate on a capped-fee business is what carries earnings; a deceleration would be visible immediately.

Leadership changed in the middle of all this. Zachary Carpenter took over as chief executive on July 1, 2026. Capital return continued through the transition, with the board declaring $1.60 a share on the common stock, paid June 30 to holders of record June 15, alongside quarterly dividends on the Series D through H preferred and on the 6.875% Series I.

Peer Cohorts (Per Segment, With Filing Citations)

Farm & Ranch / Corporate AgFinance +5 more (reported)

• FNMA (FEDERAL NATIONAL MORTGAGE ASSOCIATION FANNIE MAE)
• FY2025 10-K: …fnm:ForbearanceAndRepaymentPlansAndTrialModificationMember us-gaap:FinancialAssetPastDueMember 2023-01-01 2023-12-31 0000310522 srt:SingleFamilyMember us-gaap:FixedRateResidentialMortgageMember fnm:ForbearanceAndRepaymentPlansAndTrialModificationMember us-gaap:FinancialAssetNotPastDueMember 2023-01-01 2023-12-31…
• FY2025 10-K: …fnm:ForbearanceAndRepaymentPlansAndTrialModificationMember 2024-01-01 2024-12-31 0000310522 srt:SingleFamilyMember fnm:FixedRateResidentialMortgage15YearMember fnm:ForbearanceAndRepaymentPlansAndTrialModificationMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2024-01-01 2024-12-31 0000310522…
• SLM (SLM Corp)
• FY2025 10-K: …such time that the borrower(s) have made a sufficient number of payments (typically six months) to return to accrual status. At both December 31, 2025 and December 31, 2024, we had an immaterial amount of loans in nonaccrual status. Allowance for FFELP Loan Losses During the third quarter of 2024, we transferred our…
• FY2025 10-K: …to cover lifetime expected credit losses. The allowance for FFELP Loan losses used historical experience of customer default behavior. We applied the default rate projections, net of applicable risk sharing, to our FFELP Loans for the respective period to perform our quantitative calculation. Once the quantitative…
• NNI (NELNET, INC.)
• FY2025 10-K: …srt:MaximumMember us-gaap:WarehouseAgreementBorrowingsMember 2025-01-01 2025-12-31 0001258602 us-gaap:SecuredDebtMember nni:FFELPWarehouseFacilityDueNovember2024Member us-gaap:WarehouseAgreementBorrowingsMember 2025-01-01 2025-12-31 0001258602 nni:ClassA1NotesMember us-gaap:SecuredDebtMember 2025-12-31 0001258602…
• FY2025 10-K: :EducationTechnologyServicesAndPaymentsSegmentMember 2024-01-01 2024-12-31 0001258602 us-gaap:OperatingSegmentsMember nni:AssetGenerationAndManagementSegmentMember 2024-01-01 2024-12-31 0001258602 us-gaap:OperatingSegmentsMember nni:NelnetBankMember 2024-01-01 2024-12-31 0001258602…
• CACC (CREDIT ACCEPTANCE CORP)
• FY2025 10-K: …Loan") in exchange for the right to service the underlying Consumer Loans. Under the Purchase Program, we buy the Consumer Loans from the Dealers (referred to as a "Purchased Loan") and keep all amounts collected from the consumer. Dealer Loans and Purchased Loans are collectively referred to as "Loans." The…
• FY2025 10-K: …the Sixth Amended and Restated Credit Agreement, dated as of June 11, 2015, among the Company, the Banks which are parties thereto from time to time, and Comerica Bank (incorporated by reference to Exhibit 4.74 to the Company's Current Report on Form 8-K filed June 16, 2015). 4.10 First Amendment to Loan and Security…
• LC (LendingClub Corporation)
• FY2025 10-K: …to service their debts, such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans and leases individually by classifying the loans and leases based on their associated credit risk and…
• FY2025 10-K: …to oversight by the FDIC and the Utah Department of Financial Institutions, and continues to be a partner. These authorities impose obligations and restrictions on our activities and the loans facilitated through our lending marketplace through issuing and partner banks. With respect to the issuing bank model, there…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.