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PennyMac Mortgage (PMT)
NYSE:PMT
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PennyMac Mortgage
(NYSE:PMT)
54Neutral
Positive Factors
Dividend
There could be near-term upside from raising the dividend.
Earnings
The stock rallied on good earnings results.
Financial performance
PennyMac Mortgage (PMT) reported 3Q GAAP EPS of $0.36, ahead of BofA/Cons estimates.
Negative Factors
Dividend yield
The dividend yield at 12% remains lower than in the other REIT-servicers Annaly and Two Harbors.
Interest rate sensitivity
Interest rate sensitive strategy generated neutral pretax income, offset by interest rate hedges and MSR fair value declines.
Loan origination
Origination volume declined sequentially to $3.5 billion of correspondent loans acquired for PMT.
PennyMac Mortgage (PMT) vs. S&P 500 (SPY)
Market Cap
$1.06B
Dividend Yield13.11%
Average Volume (3M)1.12M
Price to Earnings (P/E)13.1
Beta (1Y)0.51
Revenue Growth-5.51%
EPS Growth-43.96%
CountryUS
Employees7
SectorReal Estate
Sector Strength77
IndustryREIT - Mortgage
Share Statistics
EPS (TTM)0.93
Shares Outstanding86,860,960
10 Day Avg. Volume1,261,469
30 Day Avg. Volume1,117,200
Financial Highlights & Ratios
PEG Ratio0.59
Price to Book (P/B)N/A
Price to Sales (P/S)1.97
Price to Cash Flow (P/CF)-0.20
P/FCF Ratio0.00
Enterprise Value/Market Cap13.21
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit7.20K
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$14.25Price Target Upside16.80% Upside
Rating ConsensusHold
Number of Analyst Covering7
PennyMac Mortgage Business Overview & Revenue Model
Company DescriptionPennyMac Mortgage Investment Trust, a specialty finance company, primarily invests in mortgage-related assets in the United States. The company's Credit Sensitive Strategies segment invests in credit risk transfer (CRT) agreements, CRT securities, distressed loans, real estate, and non-agency subordinated bonds. Its Interest Rate Sensitive Strategies segment engages in investing in mortgage servicing rights, excess servicing spreads, and agency and senior non-agency mortgage-backed securities (MBS), as well as related interest rate hedging activities. The company's Correspondent Production segment is involved in purchasing, pooling, and reselling newly originated prime credit residential loans directly or in the form of MBS. PNMAC Capital Management, LLC acts as the manager of PennyMac Mortgage Investment Trust. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its shareholders. PennyMac Mortgage Investment Trust was founded in 2009 and is headquartered in Westlake Village, California.
How the Company Makes MoneyPennyMac Mortgage Investment Trust makes money through several key revenue streams. The primary sources of revenue include the net interest income earned from its investment in mortgage-related assets and the income generated from its mortgage origination and servicing operations. In its correspondent production segment, PMT purchases newly originated mortgage loans from correspondent lenders, pools them, and sells them to government-sponsored enterprises (GSEs) or into the secondary market, earning gains on the sale. In the credit sensitive strategies segment, the company invests in CRT securities and MSRs, which provide a steady stream of income through interest payments and servicing fees. Additionally, PennyMac benefits from strategic partnerships with financial institutions and investors, which support its operations and growth in the mortgage market.
PennyMac Mortgage Financial Statement Overview
Summary
PennyMac Mortgage's financials show volatility in revenue and income due to operational challenges, reflected in a 45 score for the income statement. The balance sheet's high debt-to-equity ratio and inconsistent ROE result in a score of 55, while cash flow challenges yield a score of 60. Overall, the company is in transition, needing to stabilize revenue and manage debt for long-term health.Income Statement
PennyMac Mortgage shows significant fluctuations in revenue and profit margins. While the gross profit margin demonstrates some recovery in recent periods, the net profit margin remains volatile due to inconsistent net income figures. The revenue growth rate has been erratic, indicating challenges in maintaining consistent revenue streams. The negative EBIT and EBITDA margins in the latest period highlight operational inefficiencies.45
Neutral
Balance Sheet
The balance sheet reveals a high debt-to-equity ratio, which could pose financial risks if not managed effectively. However, the equity ratio suggests that a reasonable proportion of the company's assets are financed by equity. The return on equity is inconsistent, driven by fluctuating net income figures. Despite these challenges, the company maintains substantial cash and equivalents.55
Neutral
Cash Flow
PennyMac Mortgage's cash flow statements indicate challenges in maintaining stable free cash flow, although there has been some improvement in operating cash flow over time. The free cash flow to net income ratio is relatively strong, suggesting efficient cash generation relative to reported net income. However, fluctuations in cash flow from investing and financing activities point to ongoing adjustments in capital structure.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 14.72M | 725.87M | 103.11M | 82.84M | 108.63M | Gross Profit |
| 1.94M | 578.77M | 25.55M | -107.23M | -119.97M | EBIT |
| -3.67M | 558.23M | 47.89M | 44.66M | 79.73M | EBITDA |
| -3.67M | 1.28B | 54.64M | 44.66M | 79.73M | Net Income Common Stockholders |
| 119.17M | 199.65M | -73.29M | 56.85M | 52.37M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 337.69M | 409.42M | 364.14M | 1.93B | 2.98B | Total Assets |
| 14.41B | 13.11B | 13.92B | 13.77B | 11.52B | Total Debt |
| 3.54B | 4.85B | 4.77B | 4.49B | 2.27B | Net Debt |
| 3.20B | 10.19B | 3.33B | 2.73B | -583.60M | Total Liabilities |
| 12.47B | 11.16B | 11.96B | 11.41B | 9.22B | Stockholders Equity |
| 1.94B | 1.96B | 1.96B | 2.37B | 2.30B |
| Cash Flow | Free Cash Flow | |||
| 158.10M | 1.33B | 1.78B | -2.79B | 671.66M | Operating Cash Flow |
| 158.10M | 1.34B | 1.78B | -2.82B | 671.66M | Investing Cash Flow |
| 603.00K | -21.73M | -1.87B | 1.09B | -15.37M | Financing Cash Flow |
| -157.86M | -1.15B | 135.89M | 1.73B | -702.64M |
PennyMac Mortgage Technical Analysis
Negative
12.20
Price Trends
13.56
Negative
13.02
Negative
12.88
Negative
Market Momentum
-0.36
Positive
38.02
Neutral
22.89
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PMT, the sentiment is Negative. The current price of 12.2 is below the 20-day moving average (MA) of 12.99, below the 50-day MA of 13.56, and below the 200-day MA of 12.88, indicating a bearish trend. The MACD of -0.36 indicates Positive momentum. The RSI at 38.02 is Neutral, neither overbought nor oversold. The STOCH value of 22.89 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PMT.
PennyMac Mortgage Risk Analysis
PennyMac Mortgage disclosed 76 risk factors in its most recent earnings report. PennyMac Mortgage reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
PennyMac Mortgage Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
65 Neutral | $1.23B | 9.66 | 9.45% | 12.02% | 11.91% | 52.26% | |
60 Neutral | $1.18B | 15.79 | 6.01% | 13.74% | 13.67% | -34.10% | |
59 Neutral | $2.72B | 11.58 | 0.09% | 8782.99% | 5.32% | -16.79% | |
55 Neutral | $1.28B | ― | 0.41% | 11.94% | -14.98% | 95.53% | |
54 Neutral | $1.06B | 13.09 | 6.36% | 13.11% | -5.51% | -43.96% | |
51 Neutral | $1.22B | 4.96 | 13.74% | 15.29% | 28.33% | ― | |
47 Neutral | $1.31B | 8.01 | -0.11% | 18.01% | 142.18% | 50.74% |
* Real Estate Sector Average
Performance Comparison
PMT
PennyMac Mortgage
12.20
-0.23
-1.85%
ARI
Apollo Real Estate
9.21
-0.28
-2.95%
ARR
ARMOUR Residential REIT
15.99
0.11
0.69%
DX
Dynex Capital
12.23
1.93
18.74%
EFC
Ellington Financial
12.98
2.66
25.78%
TWO
Two Harbors
11.77
0.84
7.69%
PennyMac Mortgage Earnings Call Summary
Earnings Call Date:Apr 22, 2025
(Q1-2025)
| % Change Since: -7.65%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced perspective with notable achievements in securitizations and risk management practices, but also highlighted significant challenges due to interest rate volatility and a net loss. The commitment to maintaining dividend stability and increasing retention in correspondent production were positive aspects, while declines in loan volume and MSR fair value were concerning.Q1-2025 Updates
Positive Updates
Successful Securitizations
Completed three securitizations of investor loans totaling $1 billion in unpaid principal balance, retaining $94 million in new investments with returns on equity expected to be in the mid-teens.
Strong Risk Management
Diversified investment portfolio, efficient cost structure, and strong risk management practices, including interest rate hedging program and unique non-mark-to-market financing arrangements.
Dividend Stability
PMT declared a first quarter common dividend of $0.40 per share despite market challenges.
Increased Retention in Correspondent Production
PMT retained 21% of total conventional correspondent production in the first quarter, up from 19% in the fourth quarter.
Negative Updates
Net Loss Reported
PMT produced a net loss to common shareholders of $1 million or diluted earnings per share of negative $0.01.
Interest Rate Volatility Impact
Net fair value declines due to interest rate volatility and credit spread widening affected income.
Decline in Correspondent Loan Volume
Total correspondent loan acquisition volume was $23 billion in the first quarter, down 18% from the prior quarter.
Decrease in MSR Fair Value
Fair value declines on MSR investments were $56 million due to a decrease in mortgage rates driving an increase in future prepayment projections.
Company Guidance
During PennyMac Mortgage Investment Trust's first quarter 2025 earnings call, the company reported a net loss of $1 million to common shareholders, with diluted earnings per share at negative $0.01. Despite this loss, the company declared a common dividend of $0.40 per share for the first quarter. The book value per share as of March 31st was $15.43, a slight decline from the previous quarter. PMT emphasized its robust risk management practices, including interest rate hedging and non-mark-to-market financing arrangements, which helped navigate the volatile interest rate environment. The company's diversified investment strategy includes significant investments in mortgage servicing rights (MSRs) and credit risk transfer (CRT) transactions, which continue to perform well due to low expected prepayments and strong consumer credit strength. PMT successfully completed three securitizations totaling $1 billion in unpaid principal balance, retaining $94 million in new investments with expected returns on equity in the mid-teens. Looking forward, the company plans to maintain a consistent securitization cadence, aiming for one non-owner-occupied loan securitization per month and one jumbo loan securitization per quarter. The company's current run rate reflects a quarterly average of $0.35 per share, slightly down from the previous quarter, with potential for improvement if the yield curve steepens.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.