Federal Agricultural Mortgage Corp. (AGM), often referred to as Farmer Mac, is an exceptional opportunity for long-term focused investors due to its blend of Government Sponsored Enterprise (GSE) stability, high-quality fundamentals, and attractive valuation, recommends Doug Gerlach, editor of SmallCap Informer.
The company’s unique mission-driven model goes beyond providing essential liquidity to American agriculture to include support of capital investments in all manner of rural infrastructure. That underpins a highly resilient business model designed to generate competitive shareholder returns across market cycles.
The fundamental strength of Farmer Mac is evidenced by its consistent growth and expanding footprint. Over the last ten years, the company achieved an 11.3% annualized revenue growth rate and a 15.1% annualized EPS growth rate. Looking forward, growth is projected at a solid 11% annually for both revenue and EPS, capitalizing on diversification across its seven operating segments.
The Infrastructure Finance line of business — including Renewable Energy and Broadband Infrastructure — is a key catalyst, driving substantial portfolio growth. In Q3 2025, Infrastructure Finance volume increased by $600 million, with Renewable Energy and Broadband volumes doubling or more year-over-year.
Quality metrics reinforce the investment thesis. Farmer Mac maintains a deeply conservative financial profile, defined by strong capital levels, stringent underwriting, and efficient operations. The company ended Q3 2025 with $723 million in core capital above the statutory minimum requirement, ensuring stability. Its operating discipline resulted in a 68.8% pre-tax profit margin in 2024 and an efficiency ratio maintained at 27%.
Furthermore, adherence to rigorous credit standards results in lifetime charge-off losses on agricultural mortgage loans of only 0.12%, while average portfolio Loan-to-Value (LTV) remains low at 47%. For shareholders, Farmer Mac offers consistent returns, having increased its quarterly dividend for 14 consecutive years, with a recent indicated yield of 3.5%.
The combination of continued earnings momentum and disciplined capital management translates to a compelling valuation. At the recent price of around $171, the stock traded in our recommended Buy Zone. The attractive projected reward/risk ratio stood at 3.4-to-1, supporting a projected total annual return of 16.9%.
Recommended Action: Buy AGM.
