PennyMac Financial (PFSI) AI Stock Analysis

• Market Cap: $4.82B
• Dividend Yield: 1.29%
• Average Volume (3M): 427.03K
• Price to Earnings (P/E): 12.9
• Beta (1Y): 0.55
• Revenue Growth: 20.77%
• EPS Growth: 96.22%
• Country: US
• Employees: 4,457
• Sector: Financial
• Sector Strength: 70
• Industry: Financial - Mortgages
• EPS (TTM): 2.54
• Shares Outstanding: 51,710,033
• 10 Day Avg. Volume: 494,295
• 30 Day Avg. Volume: 427,034
• PEG Ratio: 1.24
• Price to Book (P/B): 1.24
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -1.89
• Enterprise Value/Market Cap: 4.85
• Enterprise Value/Revenue: 2.08
• Enterprise Value/Gross Profit: 9.36
• Enterprise Value/Ebitda: 6.75
• 1Y Price Target: $120.29
• Price Target Upside: 29.15% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 8

• Rating: 56 Neutral
• Price Target: $99.00 ▲(6.29%Upside)

PennyMac Financial's overall stock score is primarily hindered by concerns in financial performance, particularly cash flow issues and high leverage. Technical analysis also indicates bearish trends. However, valuation is reasonable, and the earnings call along with corporate events provide some positive outlook. Improvement in financial management and market strategy could enhance future prospects.

Positive Factors

Book Value

BVPS increased by 3.3%, indicating a rise in book value per share.

Financial Performance

The company's growth rate and development of its capital structure have generally overshadowed any minor glitches in the credit outlook.

Housing Market

More homes are available with inventory up 29%, which is a positive for the housing market.

Negative Factors

Earnings

EPS missed consensus estimates, primarily due to higher realization of cash flows on MSRs and increased loan origination expenses.

Interest Rates

Production margins fell quarter over quarter due to negative cross-channel impacts from interest rate and spread volatility.

Return on Equity

Operating ROE shrank to 13%, indicating a disappointing quarter for the company.

PennyMac Financial Business Overview & Revenue Model

Company Description

PennyMac Financial Services, Inc. (PFSI) is a leading national mortgage lender and servicer headquartered in Westlake Village, California. Operating primarily in the United States, the company provides a range of residential mortgage loan products and services to homeowners and homebuyers, as well as engaging in the servicing of mortgage loans. PennyMac Financial's key business segments include loan production, loan servicing, and investment management, positioning it as a prominent player in the mortgage finance sector.

How the Company Makes Money

PennyMac Financial makes money through three primary revenue streams: loan production, loan servicing, and investment management. In loan production, the company generates revenue by originating and selling mortgage loans, earning fees and gain-on-sale margins. The loan servicing segment provides income through servicing fees collected on mortgage loans, along with ancillary services such as late fees and other borrower charges. Investment management contributes to revenue by managing mortgage-related investment funds and earning management fees. PennyMac Financial's earnings are also influenced by its strategic partnerships with institutional investors and financial institutions, which enhance its capacity to manage large volumes of mortgage transactions and investments.

PennyMac Financial Financial Statement Overview

Summary

PennyMac Financial shows a mixed financial performance. Strong revenue growth and improving gross profit margins are positive, but declining net profit margins and significant liquidity concerns due to negative cash flows raise red flags. High leverage increases vulnerability to economic shifts, although a stable equity position mitigates some risk.

Income Statement

The company's recent revenue growth is positive, with a TTM revenue increase from the previous year. Gross profit margins are strong and have been improving, indicating efficient cost management. However, net profit margins have decreased over the years, suggesting increased expenses or lower profitability in net terms. The EBIT margin is robust, but EBITDA margin shows some volatility, possibly due to fluctuating depreciation or amortization costs.

Balance Sheet

The debt-to-equity ratio is high, indicating significant leverage which could pose a risk in adverse economic conditions. However, the company maintains a stable equity ratio, suggesting a reasonable level of equity financing in its asset base. Return on equity is moderate, reflecting a balanced use of shareholder equity for generating net income. Overall, the balance sheet shows potential risks associated with high debt levels.

Cash Flow

The company is experiencing negative operating cash flow in recent periods, which is a concern for liquidity. Free cash flow has also been negative, driven by large capital expenditures and operating cash outflows. The operating cash flow to net income ratio is unfavorable, indicating cash flow generation issues relative to net income. These factors raise concerns about the company's short-term financial flexibility and ability to fund operations internally.

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
EBITDA	473.17M	424.06M	665.25M	1.36B	2.24B
Net Income	311.42M	144.66M	475.51M	1.00B	1.65B
Balance Sheet
Total Assets	26.09B	18.84B	16.82B	18.78B	31.60B
Cash, Cash Equivalents and Short-Term Investments	659.03M	948.64M	1.34B	346.94M	547.93M
Total Debt	20.55B	13.49B	11.80B	13.99B	26.89B
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

• Technical Analysis Sentiment: Negative
• Last Price: 93.14
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 93.14 is below the 20-day moving average (MA) of 98.66, below the 50-day MA of 97.59, and below the 200-day MA of 100.43, indicating a bearish trend. The MACD of -1.29 indicates Positive momentum. The RSI at 39.27 is Neutral, neither overbought nor oversold. The STOCH value of 17.22 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PFSI.

PennyMac Financial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
COOP	69 Neutral	$10.22B	17.72	11.76%	―	2.27%	-17.46%
Sector *	65 Neutral	£4.95B	10.61	6.90%	5.21%	23.81%	1.74%
RKT	61 Neutral	$31.07B	68.51	>-0.01%	―	21.52%	-103.65%
GHLD	57 Neutral	$1.24B	28.60	3.71%	2.52%	42.92%	64.72%
PFSI	56 Neutral	$4.82B	12.91	10.05%	1.29%	20.77%	96.22%
UWMC	52 Neutral	$6.43B	37.74	-5.74%	9.95%	9.19%	-171.38%
LDI	48 Neutral	$524.56M	―	-29.48%	―	3.76%	16.19%

PennyMac Financial Corporate Events

PennyMac Financial Holds Annual Stockholders Meeting

On June 18, 2025, PennyMac Financial held its Annual Meeting of Stockholders to elect eleven directors for a one-year term, ratify Deloitte & Touche LLP as the independent public accounting firm for 2025, and approve executive compensation. The meeting saw a high participation rate with 96.1% of eligible votes cast, resulting in the election of all director nominees and the approval of the accounting firm and executive compensation.

The most recent analyst rating on (PFSI) stock is a Buy with a $130.00 price target. To see the full list of analyst forecasts on PennyMac Financial stock, see the PFSI Stock Forecast page.

PennyMac Financial Closes $850M Senior Notes Offering

On May 8, 2025, PennyMac Financial Services closed an offering of $850 million in 6.875% Senior Notes due 2032. The proceeds will be used to redeem existing notes and repay borrowings, impacting the company’s financial structure and potentially enhancing its market position.