NRUC

We rate NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP /DC/ (NRUC) as a Reduce with a composite score of 43.4/100 at a current price of $24.33. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in stability (90th percentile) and momentum (47th percentile), which together account for the majority of the composite score. Offsetting weakness in quality (23th percentile) and value (25th percentile) tempers our overall conviction. We assign a No Moat rating (18/100), High uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress; valuation compression risk if growth disappoints. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP /DC/ holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 43.4/100 places it at rank #3058 in our full 7,333-stock universe. At N/A in market capitalization, NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP /DC/ is a small-cap player in the Finance, Insurance, And Real Estate space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -68% combined with momentum at the 47th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

Margin data is not available for NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP /DC/, which limits our assessment of the company's cost structure and operating efficiency. We rely on factor-based signals to infer business quality in the absence of detailed margin data.

At a current price of $24.33, NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP /DC/ is trading at a premium to fundamental value. Our value factor score of 25/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

Valuation multiples are not available for this company, which limits our ability to assess relative pricing. We rely more heavily on factor-based valuation signals in such cases.

We assign a High uncertainty rating to NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP /DC/. Key risk factors include significant leverage (1137% debt-to-equity), weak quality scores (23th percentile), low beta of 0.17 — while defensive, this may indicate limited upside participation in bull markets. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (1137% debt-to-equity); weak quality scores (23th percentile); low beta of 0.17 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 90th percentile and quality factor at the 23th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (90th percentile) suggests predictable business dynamics; a 5.85% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP /DC/'s capital allocation as Poor. Key concerns include low returns on equity (3.7%), elevated leverage (1137% D/E), weak asset returns (ROA 0.3%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP /DC/ significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP /DC/ receives a Reduce rating with a composite score of 43.4/100 (rank #3058 of 7,333). Our quantitative framework assigns a No Moat (18/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 45/100.

Our analysis does not support a constructive view on NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP /DC/ at this time. The combination of limited competitive advantages, high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.