PennyMac Financial (PFSI) AI Stock Analysis

• Market Cap: $5.53B
• Dividend Yield: 1.09%
• Average Volume (3M): 422.85K
• Price to Earnings (P/E): 14.8
• Beta (1Y): 0.54
• Revenue Growth: 20.77%
• EPS Growth: 96.22%
• Country: US
• Employees: 4,457
• Sector: Financial
• Sector Strength: 69
• Industry: Financial - Mortgages
• EPS (TTM): 2.54
• Shares Outstanding: 51,710,033
• 10 Day Avg. Volume: 407,948
• 30 Day Avg. Volume: 422,852
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 3.31
• Enterprise Value/Revenue: 6.98
• Enterprise Value/Gross Profit: 7.34
• Enterprise Value/Ebitda: 21.85
• 1Y Price Target: $119.50
• Price Target Upside: 8.91% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

• Rating: 67 Neutral
• Price Target: $114.00 ▲(3.90% Upside)

PennyMac Financial's overall stock score is driven by strong technical analysis and positive corporate events, offset by mixed financial performance and valuation. The company's strategic advancements and market share growth are promising, but challenges in profitability and liquidity need attention.

Positive Factors

Business Model

The strength of PFSI's balanced business model is becoming increasingly important in a challenging mortgage climate.

Earnings

The beat was driven by higher than estimated servicing fee income and higher origination volume.

Market Stability

MBS spreads over Treasuries in the secondary market are relatively stable, indicating stability in the mortgage market.

Negative Factors

Credit Performance

The stock valuation may be increasingly tethered right now to conditions affecting credit performance in the servicing portfolio.

Financial Performance

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

Interest Rates

Interest rate volatility is high, making the market sensitive to changes in rates and economic directives.

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 multiple channels, primarily within its Mortgage Banking segment, which includes loan origination fees, gain on sale of loans, and servicing fees. The company earns income from the origination of mortgage loans by charging origination fees and earning a profit margin on the sale of these loans to investors in the secondary market. Additionally, PennyMac collects servicing fees for managing loans in its portfolio, which constitutes a significant revenue stream. The Investment Management segment contributes to earnings through management fees and performance-based fees from its investment funds. Relationships with various investors and strategic partnerships also enhance its access to capital markets, facilitating loan sales and improving liquidity.

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: Positive
• Last Price: 109.72
• 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 109.72 is above the 20-day moving average (MA) of 100.85, above the 50-day MA of 99.49, and above the 200-day MA of 100.10, indicating a bullish trend. The MACD of 2.50 indicates Negative momentum. The RSI at 65.00 is Neutral, neither overbought nor oversold. The STOCH value of 69.84 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
PFSI	67 Neutral	$5.53B	14.83	10.05%	1.09%	20.77%	96.22%
COOP	65 Neutral	$12.24B	21.22	11.76%	―	2.27%	-17.46%
RKT	61 Neutral	$38.81B	68.51	>-0.01%	―	21.52%	-103.65%
Sector *	61 Neutral	C$15.82B	6.66	15.12%	5.92%	28.62%	-7.32%
GHLD	58 Neutral	$1.23B	51.03	2.12%	2.49%	34.62%	-7.94%
LDI	57 Neutral	$622.14M	―	-23.67%	―	6.60%	44.77%
UWMC	56 Neutral	$8.96B	37.74	8.18%	6.87%	12.27%	-21.43%

PennyMac Financial Corporate Events

PennyMac Financial Completes $650 Million Senior Notes Offering

On August 12, 2025, PennyMac Financial Services, Inc. completed a $650 million offering of 6.750% Senior Notes due 2034. The proceeds will be used to repay existing debts and for general corporate purposes, impacting the company’s financial strategy and positioning in the market.

PennyMac Financial Announces $650M Senior Notes Offering

On August 7, 2025, PennyMac Financial Services, Inc. announced the pricing of a $650 million private offering of 6.750% senior notes due in 2034. The proceeds from this offering will be used to repay borrowings under the company’s secured MSR facilities, other secured indebtedness, and for other general corporate purposes. This move is expected to impact the company’s financial structure by addressing existing debts and supporting broader corporate objectives.

PennyMac Financial Announces $650M Senior Notes Offering

On August 7, 2025, PennyMac Financial Services, Inc. announced its plan to offer $650 million in senior notes due 2034 through a private offering. The proceeds from this offering will be used to repay borrowings under the company’s secured MSR facilities, other secured indebtedness, and for general corporate purposes. This move is aimed at strengthening the company’s financial position and optimizing its capital structure, potentially impacting its operations and market positioning.

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.