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Stock Analyst Update

Fannie Mae's Shares Look Appealing

The loan buyer's growth is on track despite rising interest rates.

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Fannie Mae's (FNM) solid second-quarter earnings report wasn't enough to lift the company's share price Thursday, but the latest sell-off may be a buying opportunity for investors.

The mortgage-buying giant's profits hit Wall Street's estimate of $1.05 per share, and its results looked surprisingly trouble free given rising interest rates and a slowing economy. Fannie's credit-loss rate, which measures the number of customers defaulting on their loans, improved during the quarter. And its average net interest margin--the difference between what the company pays for funding and what it earns on its investments--was steady, despite pressure from rising interest rates.

Laura Pavlenko Lutton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.