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PennyMac Mortgage (PMT)
NYSE:PMT
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PennyMac Mortgage
(NYSE:PMT)68Neutral
Positive Factors
Earnings
PennyMac Mortgage (PMT) reported GAAP EPS of $0.36, ahead of analyst estimates.
Financial Performance
The credit sensitive strategy generated pretax income of $26.4M, or a 24% annualized ROE.
Negative Factors
Dividend
The dividend yield at 12% remains lower than in the other REIT-servicers Annaly and Two Harbors.
PennyMac Mortgage (PMT) vs. S&P 500 (SPY)
Market Cap
$1.25B
Dividend Yield11.14%
Average Volume (3M)733.43K
Price to Earnings (P/E)10.5
Beta (1Y)0.96
Revenue Growth-16.66%
EPS Growth-23.98%
CountryUS
Employees7
SectorReal Estate
Sector Strength72
IndustryREITs
Share Statistics
EPS (TTM)1.33
Shares Outstanding86,860,960
10 Day Avg. Volume779,100
30 Day Avg. Volume733,430
Financial Highlights & Ratios
PEG Ratio0.59
Price to Book (P/B)N/A
Price to Sales (P/S)1.92
Price to Cash Flow (P/CF)-0.20
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$14.25Price Target Upside-1.72% Downside
Rating ConsensusHold
Number of Analyst Covering6
PennyMac Mortgage Business Overview & Revenue Model
Company DescriptionPennyMac Mortgage Investment Trust (PMT) is a specialty finance company primarily operating within the real estate sector. It focuses on investing in mortgage-related assets and managing residential mortgage loans. The company offers a range of services including mortgage loan origination and servicing, and it operates through two main segments: correspondent production and credit sensitive strategies. PMT primarily invests in credit risk transfer (CRT) securities, mortgage servicing rights (MSRs), and other mortgage-related opportunities to generate income for its shareholders.
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
Positive
14.50
Price Trends
13.19
Positive
13.16
Positive
13.07
Positive
Market Momentum
0.38
Negative
68.17
Neutral
69.04
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PMT, the sentiment is Positive. The current price of 14.5 is above the 20-day moving average (MA) of 14.01, above the 50-day MA of 13.19, and above the 200-day MA of 13.07, indicating a bullish trend. The MACD of 0.38 indicates Negative momentum. The RSI at 68.17 is Neutral, neither overbought nor oversold. The STOCH value of 69.04 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PMT.
PennyMac Mortgage Risk Analysis
PennyMac Mortgage disclosed 75 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 (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | $9.36B | 10.99 | 9.58% | 14.09% | 384.69% | 963700.00% | |
68 Neutral | $1.25B | 10.50 | 8.24% | 11.14% | -16.66% | -23.98% | |
68 Neutral | $12.38B | 13.21 | 8.40% | 12.14% | 13.33% | ― | |
64 Neutral | $1.12B | 12.57 | 6.92% | 10.28% | 7.13% | 64.82% | |
62 Neutral | $1.44B | 5.82 | 13.74% | 13.04% | 28.33% | ― | |
61 Neutral | $4.91B | 18.99 | -3.12% | 7.77% | 6.71% | -19.69% | |
60 Neutral | $1.08B | 12.88 | 6.35% | 13.30% | 26.34% | 79.07% |
* Real Estate Sector Average
Performance Comparison
PMT
PennyMac Mortgage
14.50
1.84
14.53%
AGNC
AGNC Investment
10.29
2.02
24.43%
NLY
Annaly Capital
21.69
4.71
27.74%
CIM
Chimera Investment
13.90
1.99
16.71%
MFA
MFA Financial
10.63
0.84
8.58%
TWO
Two Harbors
13.93
2.79
25.04%
PennyMac Mortgage Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: 12.49% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
The earnings call presents a generally positive outlook for PMT, emphasizing strong fourth quarter performance, consistent dividends, and successful securitization efforts despite challenges in loan acquisition and losses on certain investments.Highlights
Strong Fourth Quarter Performance
PMT produced a 10% return on equity in Q4, with $36 million net income to common shareholders and $0.41 diluted earnings per share. Book value per share increased to $15.87.
Dividend Consistency
PMT declared a fourth quarter common dividend of $0.40 per share, maintaining consistency despite interest rate volatility.
Successful Securitization Efforts
Completed two securitizations of agency-eligible investor loans in Q4, and a third after quarter-end, retaining $73 million of new investments in credit subordinate bonds.
Low Delinquency Rates
Delinquency rates for borrowers underlying PMT's MSR portfolio remained low, supporting asset performance.
Strategic Repositioning
Repositioned balance sheet for higher interest rate environment, with the issuance of $1.3 billion in term debt and opportunistic sale of certain investments.
Lowlights
Challenges in Correspondent Loan Acquisition
Total correspondent loan acquisition volume was $28 billion in Q4, up 9%, but correspondent loans acquired for PMT’s account totaled $3.5 billion, down 41% from the prior quarter.
Losses on Non-Agency Subordinate MBS
Faced losses on non-agency subordinate MBS due to increasing interest rates, impacting the credit-sensitive strategies.
Decreased Retention of Conventional Correspondent Production
PMT retained 19% of total conventional correspondent production in Q4, down from 42% in the third quarter.
Company Guidance
During the fourth quarter and full year 2024 earnings call for PennyMac Mortgage Investment Trust (PMT), the company reported a strong financial performance, highlighted by a 10% return on equity in the fourth quarter. PMT achieved a net income of $36 million for common shareholders, translating to diluted earnings per share of $0.41, and declared a dividend of $0.40 per share. The book value per share increased to $15.87 by year-end. For the full year, PMT realized a return on common equity of 8% with $119 million in net income attributable to common shareholders. The company successfully navigated significant interest rate volatility, with the 10-year Treasury yield ranging from 3.6% to 4.7%, by actively hedging mortgage servicing rights. PMT's strategic initiatives included the opportunistic sale of certain investments, a major rebalance of its Agency MBS portfolio, and the issuance of $1.3 billion in term debt. The firm also renewed its mortgage banking agreement with PFSI. Looking forward, PMT anticipates robust investment opportunities in private label securitizations, particularly for investor loans, with return on equity for these investments expected to be in the low to mid-teens.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.