Federal Agricultural Mortgage Corporation

AI-generated fair value estimate for this company.

Method: Residual income / justified price-to-book model. Q2 2026 core capital of $1.9 billion divided by 10.85 million diluted common shares (Class A 1.03M + Class B 0.50M + Class C 9.32M, all with identical economic/dividend rights) gives book value per share of $175.12. Normalized sustainable ROE of 14% (below the cyclically elevated 19% core ROE reported for Q2 2026), cost of equity 12%, long-run growth 4%. Justified P/B = (ROE-g)/(Ke-g) = (0.14-0.04)/(0.12-0.04) = 1.25x book value, giving intrinsic value of 1.25 x $175.12 = $218.90 per share.

Reasoning: Farmer Mac is a GSE-chartered agricultural-mortgage lender/guarantor whose earnings are spread- and balance-sheet-driven, so a residual-income/excess-return framework fits far better than an FCF DCF (capex and working capital don't translate). The resulting intrinsic value lines up closely with where the more-liquid Class C common (AGM) actually trades (~$218.83), which supports the reasonableness of the normalized ROE/cost-of-equity inputs used, even though AGM-A itself trades lower (~$157) due to a liquidity/ownership-restriction discount rather than a fundamental value difference.