Fannie Mae (OTCMKTS:FNMA – Get Free Report) and PennyMac Financial Services (NYSE:PFSI – Get Free Report) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, institutional ownership, dividends, profitability, analyst recommendations, earnings and valuation.

Fannie Mae has a beta of 2.01, meaning that its share price is 101% more volatile than the S&P 500. Comparatively, PennyMac Financial Services has a beta of 1.56, meaning that its share price is 56% more volatile than the S&P 500.

This table compares Fannie Mae and PennyMac Financial Services”s gross revenue, earnings per share and valuation.

Fannie Mae has higher revenue and earnings than PennyMac Financial Services.

This is a breakdown of current ratings for Fannie Mae and PennyMac Financial Services, as provided by MarketBeat.

Fannie Mae presently has a consensus target price of $13.33, indicating a potential upside of 28.08%. PennyMac Financial Services has a consensus target price of $138.67, indicating a potential upside of 7.20%. Given Fannie Mae’s higher possible upside, equities research analysts plainly believe Fannie Mae is more favorable than PennyMac Financial Services.

0.0% of Fannie Mae shares are owned by institutional investors. Comparatively, 57.9% of PennyMac Financial Services shares are owned by institutional investors. 1.0% of Fannie Mae shares are owned by insiders. Comparatively, 15.8% of PennyMac Financial Services shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

This table compares Fannie Mae and PennyMac Financial Services’ net margins, return on equity and return on assets.

PennyMac Financial Services beats Fannie Mae on 9 of the 13 factors compared between the two stocks.

Federal National Mortgage Association provides financing solutions for mortgages in the United States. It operates through two segments, Single-Family and Multifamily. The Single-Family segment securitizes and purchases single-family fixed-rate or adjustable-rate, first-lien mortgage loans, or mortgage-related securities backed by these loans; and loans that are insured by Federal Housing Administration, loans guaranteed by the Department of Veterans Affairs and Rural Development Housing and Community Facilities Program of the U.S. Department of Agriculture, manufactured housing mortgage loans, and other mortgage-related securities. The Multifamily segment securitizes multifamily mortgage loans into Fannie Mae mortgage backed securities (MBS); purchases multifamily mortgage loans; and provides credit enhancement for bonds issued by state and local housing finance authorities to finance multifamily housing. This segment also issues structured MBS backed by Fannie Mae multifamily MBS; buys and sells multifamily agency mortgage-backed securities; and invests in low-income housing tax credit multifamily projects. Federal National Mortgage Association was founded in 1938 and is based in Washington, the District of Columbia.