PennyMac Financial (PFSI) AI Stock Analysis

• Market Cap: $6.59B
• Dividend Yield: 0.92%
• Average Volume (3M): 394.03K
• Price to Earnings (P/E): 13.7
• Beta (1Y): 0.57
• Revenue Growth: 25.42%
• EPS Growth: 190.85%
• Country: US
• Employees: 4,457
• Sector: Financial
• Sector Strength: 70
• Industry: Financial - Mortgages
• EPS (TTM): 3.37
• Shares Outstanding: 51,965,473
• 10 Day Avg. Volume: 379,080
• 30 Day Avg. Volume: 394,031
• PEG Ratio: 0.15
• Price to Book (P/B): 1.36
• Price to Sales (P/S): 3.27
• P/FCF Ratio: -1.14
• Enterprise Value/Market Cap: 2.78
• Enterprise Value/Revenue: 5.90
• Enterprise Value/Gross Profit: 8.13
• Enterprise Value/Ebitda: 21.51
• 1Y Price Target: $137.17
• Price Target Upside: 4.78% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 69 Neutral
• Price Target: $143.00 ▲(9.24% Upside)

PennyMac Financial's overall stock score reflects strong earnings performance and strategic positioning in the mortgage market. The company's profitability and market leadership are significant strengths, but high leverage and negative cash flows pose risks. Technical indicators support a positive trend, while valuation metrics suggest the stock is fairly priced. The earnings call provided a positive outlook, though some challenges remain.

Positive Factors

Strong Return on Equity

A high return on equity indicates efficient use of shareholder funds and strong profitability, supporting long-term financial health.

Strategic MSR Sale

The strategic sale of MSRs frees up capital for higher return opportunities, enhancing the company's capital efficiency and growth potential.

Market Leadership in Correspondent Lending

Maintaining a leading market position in correspondent lending strengthens competitive advantage and supports sustained revenue streams.

Negative Factors

High Leverage

High leverage can limit financial flexibility and increase risk, potentially affecting the company's ability to invest in growth opportunities.

Negative Cash Flows

Negative cash flows can strain liquidity and hinder the company's ability to fund operations and investments, impacting long-term stability.

Increased Corporate Expenses

Rising expenses can pressure margins and reduce profitability, potentially affecting the company's ability to sustain earnings growth.

PennyMac Financial Business Overview & Revenue Model

Company Description

PennyMac Financial Services, Inc., through its subsidiaries, engages in the mortgage banking and investment management activities in the United States. It operates through three segments: Production, Servicing, and Investment Management. The Production segment is involved in the origination, acquisition, and sale of loans. It sources first-lien residential conventional and government-insured or guaranteed mortgage loans. The Servicing segment engages in the servicing of newly originated loans, and execution and management of early buyout transactions and servicing of loans. It performs loan administration, collection, and default management activities, including the collection and remittance of loan payments, response to customer inquiries, accounting for principal and interest, holding custodial funds for the payment of property taxes and insurance premiums, counseling delinquent borrowers, and supervising foreclosures and property dispositions, as well as administers loss mitigation activities, such as modification and forbearance programs. The Investment Management segment is involved in sourcing, performing diligence, bidding, and closing investment asset acquisitions; managing correspondent production activities for PennyMac Mortgage Investment Trust; and managing acquired assets. PennyMac Financial Services, Inc. was founded in 2008 and is headquartered in Westlake Village, California.

How the Company Makes Money

PennyMac Financial generates revenue through several key streams. The primary revenue source comes from mortgage origination fees, which are charged when new loans are processed and funded. Additionally, the company earns revenue from mortgage servicing rights, where it collects monthly servicing fees for managing mortgage loans on behalf of investors. PennyMac also generates income from the sale of loans in the secondary market and through the management of mortgage-backed securities. The company benefits from strategic partnerships with various financial institutions and investors, which enhance its capacity to originate and service loans efficiently. Furthermore, the company's focus on operational efficiencies and technology-driven solutions helps optimize its cost structure, contributing positively to its overall profitability.

PennyMac Financial Financial Statement Overview

Summary

PennyMac Financial shows strong revenue growth and operational efficiency with high gross profit and improved EBIT margins. However, high debt levels and negative cash flows present significant risks, necessitating attention to leverage and cash flow issues for long-term stability.

Income Statement

PennyMac Financial's income statement shows strong revenue growth of 106.58% in the TTM period, indicating a robust recovery. The gross profit margin is exceptionally high at 94.32%, reflecting efficient cost management. However, the net profit margin has decreased to 16.43% from 19.54% in the previous year, suggesting increased expenses or other financial pressures. EBIT and EBITDA margins have improved, indicating better operational efficiency.

Balance Sheet

The balance sheet reveals a high debt-to-equity ratio of 4.59, which is a concern for financial stability. Return on equity has improved to 9.97% in the TTM period, showing better profitability from shareholders' equity. The equity ratio is relatively low, indicating a high reliance on debt financing, which could pose risks if market conditions change.

Cash Flow

Cash flow analysis shows negative operating and free cash flows, with a significant decline in free cash flow growth by 38.09%. The operating cash flow to net income ratio is negative, indicating cash flow challenges. However, the free cash flow to net income ratio is slightly above 1, suggesting that despite negative cash flows, the company is generating enough cash to cover its net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.10B	1.59B	2.04B	2.32B	3.56B	3.95B
Gross Profit	2.25B	1.56B	847.47M	1.31B	2.13B	2.77B
EBITDA	851.57M	473.17M	424.06M	738.93M	1.40B	2.28B
Net Income	498.74M	311.42M	144.66M	475.51M	1.00B	1.65B
Balance Sheet
Total Assets	25.40B	26.09B	18.84B	16.82B	18.78B	31.60B
Cash, Cash Equivalents and Short-Term Investments	621.92M	659.03M	948.64M	1.34B	346.94M	547.93M
Total Debt	6.15B	20.55B	13.49B	11.80B	13.99B	26.89B
Total Liabilities	21.19B	22.26B	15.31B	13.35B	15.36B	28.21B
Stockholders Equity	4.21B	3.83B	3.54B	3.47B	3.42B	3.39B
Cash Flow
Free Cash Flow	-1.95B	-4.56B	-1.62B	5.95B	2.51B	-6.28B
Operating Cash Flow	-1.91B	-4.53B	-1.58B	6.03B	2.56B	-6.20B
Investing Cash Flow	497.66M	-1.89B	-273.29M	-721.58M	-304.37M	783.03M
Financing Cash Flow	1.89B	5.72B	1.47B	-4.32B	-2.45B	5.76B

PennyMac Financial Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 130.91
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PFSI, the sentiment is Positive. The current price of 130.91 is above the 20-day moving average (MA) of 129.27, above the 50-day MA of 125.67, and above the 200-day MA of 107.52, indicating a bullish trend. The MACD of 2.17 indicates Negative momentum. The RSI at 54.52 is Neutral, neither overbought nor oversold. The STOCH value of 62.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PFSI.

PennyMac Financial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GHLD	70 Outperform	$1.24B	50.97	10.53%	―	23.81%	―
PFSI	69 Neutral	$6.59B	13.66	12.55%	0.92%	25.42%	190.85%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
COOP	65 Neutral	―	―	―	―	2.27%	-17.46%
RKT	58 Neutral	$53.59B	239.67	-2.15%	―	22.56%	―
UWMC	52 Neutral	$9.17B	―	11.37%	6.98%	-8.66%	―
LDI	43 Neutral	$909.73M	―	-25.72%	―	3.91%	27.78%

PennyMac Financial Corporate Events

PennyMac Financial to Present at Barclays Conference

PennyMac Financial Services announced its participation in the Barclays Global Financial Services Conference on September 8, 2025, where it will present an investor update. The company reported growth in its servicing segment, with a total portfolio of $712 billion in unpaid principal balance as of August 31, 2025. PennyMac is also expanding its reach into the prime non-qualified mortgage loans market, aiming to leverage innovative technology and strategic partnerships to enhance its mortgage origination process.