Smith Barney Inc. is looking at Fannie Mae and Freddie Mac in a new way-and raising earnings projections for the companies as a result.

A year from now, Fannie Mae, formally the Federal National Mortgage Association, should be trading at around $53, up from a projected $46, and Freddie Mac, the Federal Home Loan Mortgage Corp., should be at $40, an increase from an estimated $33.

In a report issued last week, analyst Thomas O'Donnell raised his estimates for the companies after running them through an "economic value added" analysis.

He said the analysis determines a company's probable net operating profit by considering taxes and certain capital expenses.

The process, "used in conjunction with more traditional tools, can lead to improved price predictability," Mr. O'Donnell said.

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