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PennyMac Financial (PFSI)
NYSE:PFSI
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PennyMac Financial
(NYSE:PFSI)
62Neutral
Positive Factors
Earnings
Surging production earnings and strong servicing results have driven the company's earnings to easily beat estimates.
Market Positioning
PennyMac Financial Services aims to increase market share in the broker channel to 10%, positioning itself as a strong contender among brokers.
Negative Factors
Financial Performance
EPS missed consensus estimates as revenue and expenses came in worse than expected.
PennyMac Financial (PFSI) vs. S&P 500 (SPY)
Market Cap
$4.97B
Dividend Yield1.15%
Average Volume (3M)372.35K
Price to Earnings (P/E)16.4
Beta (1Y)1.22
Revenue Growth42.36%
EPS Growth110.48%
CountryUS
Employees4,100
SectorFinancial
Sector Strength77
IndustryBanking
Share Statistics
EPS (TTM)5.83
Shares Outstanding51,434,010
10 Day Avg. Volume341,963
30 Day Avg. Volume372,352
Financial Highlights & Ratios
PEG Ratio0.15
Price to Book (P/B)N/A
Price to Sales (P/S)3.21
Price to Cash Flow (P/CF)-0.60
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
$127.89Price Target Upside32.34% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
PennyMac Financial Business Overview & Revenue Model
Company DescriptionPennyMac Financial Services, Inc. (PFSI) is a leading national financial services company that primarily operates in the mortgage banking and investment management sectors. The company provides a comprehensive range of mortgage solutions, which include mortgage loan production, servicing, and investment management. PennyMac Financial is known for its innovative approach to mortgage lending and servicing, catering to both individual customers and institutional investors.
How the Company Makes MoneyPennyMac Financial generates revenue through several key streams. Primarily, it earns money by originating and servicing mortgage loans. Loan origination involves underwriting and funding mortgages, from which the company earns origination fees. Additionally, PennyMac services a large portfolio of mortgage loans, collecting servicing fees for managing these loans on behalf of investors or other financial institutions. The company also profits from investment management activities, which involve managing mortgage-backed securities and other investments for institutional clients. Furthermore, PennyMac benefits from strategic partnerships with banks and other financial entities that enhance its market reach and operational capabilities.
PennyMac Financial Financial Statement Overview
Summary
PennyMac Financial shows strong profitability and operational efficiency, but is challenged by declining revenues and high debt levels. Negative cash flows raise liquidity concerns, though external financing has been a mitigating factor.Income Statement
PennyMac Financial has shown varied performance over the years. The Gross Profit Margin and Net Profit Margin for 2024 are robust, although they have declined from previous highs. The company has seen a significant drop in Total Revenue from 2020 to 2024, indicating challenges in maintaining revenue growth. However, the EBIT and EBITDA margins remain strong, showcasing operational efficiency despite revenue declines.68
Positive
Balance Sheet
The balance sheet reveals a high Debt-to-Equity Ratio, which indicates significant leverage and potential risk if not managed properly. However, it is mitigated by a stable Equity Ratio and consistent Stockholders' Equity over the years, suggesting some degree of financial stability.60
Neutral
Cash Flow
Cash flow analysis shows negative Free Cash Flow in recent years, driven by substantial negative Operating Cash Flow in 2024. This could be a concern for liquidity and operational funding. However, the company has managed fluctuating cash flows historically through robust financing activities, indicating reliance on external funding.55
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.59B | 2.04B | 1.97B | 3.98B | 5.45B | Gross Profit |
| 1.56B | 1.94B | 663.10M | 2.14B | 3.97B | EBIT |
| 901.03M | 1.03B | 615.01M | 1.32B | 2.20B | EBITDA |
| 473.17M | 424.06M | 665.25M | 1.36B | 2.24B | Net Income Common Stockholders |
| 311.42M | 144.66M | 475.51M | 1.00B | 1.65B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 659.03M | 948.64M | 1.34B | 346.94M | 547.93M | Total Assets |
| 26.09B | 18.84B | 16.82B | 18.78B | 31.60B | Total Debt |
| 20.55B | 13.49B | 11.80B | 13.99B | 26.89B | Net Debt |
| 20.32B | 12.55B | 10.47B | 13.65B | 26.36B | Total Liabilities |
| 22.26B | 15.31B | 13.35B | 15.36B | 28.21B | Stockholders Equity |
| 3.83B | 3.54B | 3.47B | 3.42B | 3.39B |
| Cash Flow | Free Cash Flow | |||
| -4.56B | -1.62B | 5.95B | 2.51B | -6.28B | Operating Cash Flow |
| -4.53B | -1.58B | 6.03B | 2.56B | -6.20B | Investing Cash Flow |
| -1.89B | -273.29M | -721.58M | -304.37M | 783.03M | Financing Cash Flow |
| 5.72B | 1.47B | -4.32B | -2.45B | 5.76B |
PennyMac Financial Technical Analysis
Negative
96.64
Price Trends
103.11
Negative
103.36
Negative
101.36
Negative
Market Momentum
-1.32
Positive
37.56
Neutral
20.48
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PFSI, the sentiment is Negative. The current price of 96.64 is below the 20-day moving average (MA) of 101.26, below the 50-day MA of 103.11, and below the 200-day MA of 101.36, indicating a bearish trend. The MACD of -1.32 indicates Positive momentum. The RSI at 37.56 is Neutral, neither overbought nor oversold. The STOCH value of 20.48 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PFSI.
PennyMac Financial Risk Analysis
PennyMac Financial disclosed 58 risk factors in its most recent earnings report. PennyMac Financial 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 Financial Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $2.70B | 7.78 | 17.38% | ― | 12.43% | 15.32% | |
72 Outperform | $6.31B | 9.74 | 14.71% | ― | 22.89% | 39.00% | |
68 Neutral | $1.27B | 10.79 | 8.24% | 10.94% | -16.66% | -23.98% | |
64 Neutral | $13.80B | 10.64 | 9.23% | 4.22% | 17.66% | -7.66% | |
62 Neutral | $4.97B | 16.42 | 8.45% | 1.15% | 42.36% | 110.48% | |
59 Neutral | $26.31B | 78.31 | 4.43% | ― | 30.23% | ― |
* Financial Sector Average
Performance Comparison
PFSI
PennyMac Financial
96.64
10.86
12.66%
PMT
PennyMac Mortgage
14.33
1.50
11.69%
NMIH
NMI Holdings
34.46
4.37
14.52%
COOP
Mr Cooper Group
99.22
26.06
35.62%
RKT
Rocket Companies
13.18
0.69
5.52%
PennyMac Financial Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: -15.58% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a balanced performance with notable achievements in revenue growth, Servicing business performance, and loan originations. However, there were challenges, including a decline in Production segment pre-tax income, decreased lock volumes, and hedge losses. The company's strategic adjustments and technological enhancements suggest resilience in a volatile interest rate environment.Highlights
Strong Servicing Business Performance
The Servicing segment reported operating revenues of $1.5 billion, marking a 19% increase from the previous year, driven by increased Servicing fees and earnings on custodial balances. Operating expenses increased by only 3%.
Record Loan Originations and Acquisitions
Loan originations and acquisitions reached $36 billion in unpaid principal balance, a 13% increase from the prior quarter, and contributed to growing the Servicing portfolio to $666 billion.
Production Segment Revenue Growth
Production segment revenues increased by 47% from 2023, with a pre-tax income of $311 million, highlighting the company's ability to capture refinance opportunities.
Dividend Increase
The dividend was increased to $0.30 per quarter, a 50% increase from the previous dividend.
Growth in Book Value Per Share
The company achieved a growth in book value per share of 6%.
Lowlights
Decline in Production Segment Pre-tax Income
Production segment pre-tax income was $78 million, down from $129 million in the prior quarter, affected by higher mortgage rates.
Decreased Lock Volumes
Total lock volumes were $36 billion in UPB, down 7% from the prior quarter due to higher mortgage rates.
Hedge Losses
Hedge losses amounted to $68 million due to fair value declines on MSRs, net of hedges and costs, impacting diluted earnings per share negatively by $0.93.
Decreased Correspondent Channel Margins
Correspondent channel margins in the fourth quarter were down to 27 basis points from 33 basis points in the prior quarter.
Increased Delinquencies
The 60-plus-day delinquency rate increased sequentially and year-over-year due to seasonality and higher mortgage rates.
Company Guidance
During the fourth quarter of fiscal year 2024, PennyMac Financial Services, Inc. reported a net income of $104 million, or $1.95 per diluted share, achieving an annualized return on equity (ROE) of 11%. Excluding fair value changes, the company achieved an operating ROE of 16%, bolstered by strong performance in both its Servicing and Production segments. The Servicing segment's operating revenues reached $1.5 billion, up 19% from the previous year, with an operating pre-tax income of $643 million, marking a significant increase from $535 million in 2023. Meanwhile, the Production segment saw total acquisition and origination volumes rise to $116 billion, a 17% increase from the prior year, leading to a pre-tax income of $311 million. The servicing portfolio expanded to $666 billion in unpaid principal balance, serving 2.6 million customers. PennyMac maintained a strong presence in the correspondent lending market with $28 billion in acquisitions during the quarter, while strategically expanding its broker and consumer direct channels. The company also announced a dividend increase to $0.30 per share, reflecting a 50% rise from the previous dividend, and highlighted a 6% growth in book value per share. Looking forward, PennyMac anticipates ongoing opportunities in the origination market amid rate volatility, with an estimated $2 trillion in total originations for 2025.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.