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PennyMac Mortgage (PMT)
NYSE:PMT
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PennyMac Mortgage
(NYSE:PMT)
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Rating:55Neutral
Price Target:
$12.00
â–²(0.08% Upside)
The score is held back primarily by weak and volatile cash generation (deeply negative operating/free cash flow in the latest TTM) and bearish price positioning versus key moving averages. Offsetting these are an attractive valuation/income profile and a generally constructive earnings-call outlook tied to expanded securitization activity and targeted mid-teens ROEs, plus supportive (though debt-adding) financing actions.
Positive Factors
Scale of private-label securitizations
Rapidly scaled private-label securitizations materially increases PMT's origination and retention capability, creating a durable pipeline of higher‑return retained assets. Larger retained pools support recurring fee income, improve deal economics, and enable targeted ROEs as securitization activity grows into 2026.
Market position in non‑agency MBS
Becoming a top‑3 prime non‑agency issuer gives PMT structural advantages in distribution, pricing and access to investors. This market position supports sustained deal flow, liquidity for retained interests and competitive placement of subordinated tranches, enhancing durable origination economics and scale benefits.
High returns from credit‑sensitive strategies
Strong, repeatable ROE from credit‑sensitive investments indicates PMT can earn attractive economics outside pure rate‑sensitive MSR income. High returns from CRTs and subordinate MBS diversify earnings, bolster retained‑investment returns and support long‑term profitability if credit performance remains intact.
Negative Factors
Negative operating and free cash flow
Sustained deeply negative operating and free cash flow reduces PMT's financial flexibility, forcing reliance on capital markets and securitization funding. For a leveraged mortgage REIT, weak cash generation heightens refinancing and liquidity risk, pressuring the ability to hold retained investments through cycles.
Reported leverage spike from consolidation
Consolidation of securitization debt causing reported debt/equity to jump materially raises balance‑sheet leverage metrics and funding sensitivity. Elevated reported leverage increases covenant, rating and market‑funding risks and magnifies sensitivity to stress in securitization and wholesale funding markets.
MSR prepayment and runoff pressure
Higher MSR prepayments and runoff erode servicing fee streams and distort MSR fair‑value, reducing stable, recurring income. Persistent prepayment pressure raises hedging costs and earnings volatility, undermining the MSR‑based portion of PMT's business model and long‑term run‑rate earnings stability.
PennyMac Mortgage (PMT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.03B
Dividend Yield12.69%
Average Volume (3M)1.16M
Price to Earnings (P/E)12.0
Beta (1Y)0.41
Revenue Growth-15.48%
EPS Growth-36.45%
CountryUS
Employees7
SectorReal Estate
Sector Strength53
IndustryREIT - Mortgage
Share Statistics
EPS (TTM)0.48
Shares Outstanding87,016,600
10 Day Avg. Volume1,459,081
30 Day Avg. Volume1,160,089
Financial Highlights & Ratios
PEG Ratio-0.28
Price to Book (P/B)0.56
Price to Sales (P/S)2.17
P/FCF Ratio-0.40
Enterprise Value/Market Cap3.78
Enterprise Value/Revenue4.64
Enterprise Value/Gross Profit5.50
Enterprise Value/Ebitda9.93
Forecast
1Y Price Target
$13.50Price Target Upside12.59% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
PennyMac Mortgage Business Overview & Revenue Model
Company DescriptionPennyMac Mortgage Investment Trust, a specialty finance company, primarily invests in mortgage-related assets in the United States. The company's Credit Sensitive Strategies segment invests in credit risk transfer (CRT) agreements, CRT securities, distressed loans, real estate, and non-agency subordinated bonds. Its Interest Rate Sensitive Strategies segment engages in investing in mortgage servicing rights, excess servicing spreads, and agency and senior non-agency mortgage-backed securities (MBS), as well as related interest rate hedging activities. The company's Correspondent Production segment is involved in purchasing, pooling, and reselling newly originated prime credit residential loans directly or in the form of MBS. PNMAC Capital Management, LLC acts as the manager of PennyMac Mortgage Investment Trust. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its shareholders. PennyMac Mortgage Investment Trust was founded in 2009 and is headquartered in Westlake Village, California.
How the Company Makes MoneyPennyMac generates revenue primarily through the acquisition and management of mortgage-related assets, including mortgage loans and MSRs. The company earns income from the interest on loans it originates, as well as from servicing fees associated with managing the loans on behalf of investors. Additionally, PMT generates revenue through the sale of mortgage-backed securities, where it pools loans and sells them to investors, thereby earning a profit from the spread between the loan interest rates and the securities' yields. Key partnerships with financial institutions and a robust origination platform further enhance its revenue streams, allowing PMT to capitalize on market opportunities and manage risks effectively.
PennyMac Mortgage Earnings Call Summary
Earnings Call Date:Jan 29, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 29, 2026
Earnings Call Sentiment Positive
The call presented a predominantly positive transformation story: PMT materially scaled its private label securitization activity (19 deals / $6.7B UPB in 2025), grew retained investments nearly tenfold, achieved solid Q4 earnings ($42M, 13% ROE), and delivered attractive returns from credit-sensitive strategies. Challenges include a modest decline in run-rate EPS, a significant quarter-over-quarter drop in interest-rate sensitive income excluding market-driven value changes (driven by higher MSR prepayments and runoff), a small pretax loss in Correspondent Production, and an increase in reported debt-to-equity due to consolidation of securitization debt. On balance, the strategic momentum, strong securitization pipeline, high credit-strategy ROEs, and maintained core leverage profile outweigh the near-term operational headwinds.Q4-2025 Updates
Positive Updates
Strong Quarterly Earnings and ROE
Net income to common shareholders of $42 million in Q4 2025, $0.48 diluted EPS, representing a 13% annualized return on common equity; book value per share increased to $15.25 from $15.16 (≈+0.6%).
Accelerated Securitization Activity and Scale
Completed 19 securitizations in 2025 totaling $6.7 billion UPB versus 2 securitizations in 2024; retained investments from securitizations grew to $528 million from $54 million (nearly tenfold increase, ≈+878%). Q4 alone: 8 securitizations totaling $2.8 billion UPB and $184 million retained; 3 additional post-quarter deals totaling $1.1 billion. Company expects ≈30 securitizations in 2026 with targeted returns on retained investments in the low- to mid-teens.
Market Position in Non-Agency MBS
PMT established itself as a top 3 issuer of prime non-Agency MBS in 2025, demonstrating successful organic investment creation via private label securitizations.
Attractive Returns from Credit-Sensitive Strategies
Credit-sensitive strategies contributed $24 million pretax, generating a 27% annualized ROE. Gains from organically created CRTs were $12 million (including $8M realized gains and carry, $4M market-driven); subordinate MBS from private label securitizations generated $11 million in gains (including $9M market-driven).
Interest Rate Hedging and MSR Valuation Movement
Interest-rate sensitive strategies contributed $28 million pretax (10% annualized ROE). Hedging activity yielded net favorable results: $26 million increase in MSR fair value partially offset by $7 million net decline in fair value of MBS and interest rate hedges. MSR assets valued at $3.6 billion at year-end.
Portfolio Composition and Credit Quality
Approximately 60% of shareholders' equity deployed to seasoned investments (MSRs 46%, GSE CRT 13%). MSR underlying loans weighted average coupon 3.9% (low reprice risk); GSE CRT portfolio weighted average current LTV 46% with expectations of limited realized lifetime losses.
Financing and Liquidity Actions
Raised $150 million of new unsecured financing via reopenings of exchangeable senior notes due 2029 and expect to retire $345 million exchangeable senior notes due in 2026 with existing capacity. Company notes source of securitization debt repayment is limited to associated securitized loan cash flows.
Correspondent Production Scale and Fee Stability
Acquired $3.7 billion UPB from PFSI correspondent production (Q4); PMT purchased 17% of conventional conforming and 100% of non-agency eligible correspondent production; additionally acquired $1.8 billion UPB from PFSI outside the fulfillment agreement for securitizations. Weighted average fulfillment fee remained unchanged at 18 bps.
Negative Updates
Decline in Run-Rate Earnings per Share
Average quarterly run-rate return potential decreased to $0.40 per share from $0.42 per share in the prior quarter (≈-4.8%), reflecting some pressure on recurring earnings.
Drop in Interest-Rate Sensitive Income Excluding Market-Driven Changes
Income excluding market-driven value changes for the interest-rate sensitive segment fell to $21 million from $36 million in the prior quarter (≈-41.7%), driven by increased prepayment speeds and higher MSR runoff.
Correspondent Production Weakness
Correspondent Production reported a pretax loss of $1 million in Q4, primarily due to spread widening on jumbo loans during aggregation and lower channel margins from increased competition, reducing the segment's contribution to overall earnings.
Higher MSR Runoff from Elevated Prepayments
Increased prepayment speeds drove higher runoff of MSR assets, negatively impacting returns from MSR-related strategies and contributing to the lower income excluding market-driven changes noted above; MSR balance declined slightly quarter-over-quarter.
Increased Servicing Advances (Seasonal)
Servicing advances rose to $97 million from $63 million (≈+54%), attributed to seasonal property tax payments; although temporary, it increases short-term cash outlays.
Higher Reported Debt-to-Equity Ratio (Accounting Consolidation)
Total debt-to-equity increased to approximately 10:1 from 9:1 at September 30 (≈+11%), driven by consolidation of nonrecourse securitization debt onto the balance sheet; company notes core leverage excluding nonrecourse debt remained at 6:1 within expected range.
Disposition of Opportunistic CRTs due to Return Thresholds
Sold $195 million of opportunistic GSE-issued CRT investments after realizing gains because forward-looking expected returns fell below targeted return requirements, indicating some previously attractive positions lost expected return profile.
Company Guidance
Management guided that PMT expects to complete approximately 30 securitizations in 2026, targeting low‑ to mid‑teens ROE on retained investments and aiming to lift equity allocated to non‑agency securitizations from a ~9% 12‑month average to roughly 11–12% by year‑end, while optimizing toward overall targeted ROEs of 13–15%. They reiterated a quarterly run‑rate per‑share expectation of $0.40 (down from $0.42), noted the interest‑rate‑sensitive strategy’s overall run‑rate ROE of ~12.5% (interest‑rate sensitive pretax contribution $28M, 10% annualized ROE) and MSR fair‑value of $3.6B, and said MSR runoff and higher prepayments reduced income excluding market‑driven changes to $21M (from $36M). Q4 results included net income to common shareholders of $42M ($0.48 diluted, 13% annualized ROE), credit‑sensitive pretax income of $24M (27% annualized ROE) with $12M in CRT gains, subordinate MBS gains of $11M, servicing advances of $97M (up from $63M), and book value per share of $15.25 (up from $15.16). They summarized 2025 activity (19 securitizations totaling $6.7B UPB with retained investments rising to $528M from $54M in 2024), Q4 securitizations (8 deals, $2.8B UPB, $184M retained; plus $1.1B in 3 post‑quarter deals), PFSI production UPB of $3.7B (2.9B conventional, $0.8B non‑agency), with PMT buying 17% of conventional and 100% of non‑agency (expecting 15–25%/100% in Q1 2026), acquisition of $1.8B UPB for securitizations, an unchanged fulfillment fee of 18 bps, $150M of new unsecured financing raised, plan to retire $345M exchangeable notes due 2026, and leverage of ~10:1 total debt‑to‑equity (6:1 excluding nonrecourse).PennyMac Mortgage Financial Statement Overview
Summary
Profitability improved versus 2022 with positive net income in 2023–2024 and TTM 2025, and leverage improved vs 2024, but revenue/earnings are volatile and the latest TTM shows sharply negative operating profit and materially negative operating/free cash flow, which is a major financial flexibility risk.Income Statement
Profitability improved versus the 2022 loss, with positive net income in 2023, 2024, and TTM (Trailing-Twelve-Months) 2025, and solid gross and net profit margins in the most recent periods. However, the top line is volatile and trending down recently (TTM revenue down ~28% and 2024 slightly down), and earnings quality looks uneven given the sharp swing to negative operating profit in TTM (Trailing-Twelve-Months) 2025 versus strong profitability in 2023–2024.58
Neutral
Balance Sheet
Leverage remains meaningful for a mortgage REIT, with debt-to-equity around 1.7x in TTM (Trailing-Twelve-Months) 2025 (improved from ~2.9x in 2024), showing some balance-sheet de-risking. Equity is stable relative to assets, and return on equity is positive in recent periods, but overall leverage is still a key risk factor and performance is sensitive to market/financing conditions.55
Neutral
Cash Flow
Cash generation is the main weak point: operating cash flow and free cash flow are deeply negative in TTM (Trailing-Twelve-Months) 2025 and also negative in 2024, following a strong positive 2023. This level of cash burn reduces financial flexibility and can increase reliance on financing; while free cash flow trend improved versus 2024, it is still materially negative in the latest period.26
Negative
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 838.58M | 504.60M | 725.87M | -145.66M | 757.48M | 1.41B |
| Gross Profit | 708.05M | 380.50M | 603.76M | -321.20M | 448.74M | 1.08B |
| EBITDA | 391.77M | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Net Income | 122.05M | 160.98M | 199.65M | -73.29M | 56.85M | 52.37M |
Balance Sheet | ||||||
| Total Assets | 18.53B | 14.41B | 13.11B | 13.92B | 13.77B | 11.52B |
| Cash, Cash Equivalents and Short-Term Investments | 263.49M | 1.55B | 1.62B | 364.14M | 226.98M | 2.98B |
| Total Debt | 3.13B | 5.59B | 4.85B | 11.38B | 11.17B | 2.27B |
| Total Liabilities | 16.65B | 12.47B | 11.16B | 11.96B | 11.41B | 9.22B |
| Stockholders Equity | 1.88B | 1.94B | 1.96B | 1.96B | 2.37B | 2.30B |
Cash Flow | ||||||
| Free Cash Flow | -5.53B | -2.73B | 1.33B | 1.78B | -2.79B | 671.66M |
| Operating Cash Flow | -5.53B | -2.70B | 1.34B | 1.78B | -2.82B | 671.66M |
| Investing Cash Flow | 159.00M | 1.36B | -21.73M | -1.87B | 1.09B | -15.37M |
| Financing Cash Flow | 5.29B | 1.40B | -1.15B | 135.89M | 1.73B | -702.64M |
PennyMac Mortgage Technical Analysis
Negative
11.99
Price Trends
12.67
Negative
12.18
Negative
11.85
Positive
Market Momentum
0.02
Positive
34.41
Neutral
26.81
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PMT, the sentiment is Negative. The current price of 11.99 is below the 20-day moving average (MA) of 13.08, below the 50-day MA of 12.67, and above the 200-day MA of 11.85, indicating a neutral trend. The MACD of 0.02 indicates Positive momentum. The RSI at 34.41 is Neutral, neither overbought nor oversold. The STOCH value of 26.81 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PMT.
PennyMac Mortgage Risk Analysis
PennyMac Mortgage disclosed 76 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
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% | |
63 Neutral | $1.18B | 6.29 | 15.59% | 20.03% | 72.30% | -54.02% | |
61 Neutral | $985.17M | 11.33 | 6.90% | 14.90% | 5.52% | -47.72% | |
61 Neutral | $837.28M | 12.85 | 5.88% | 13.31% | -0.93% | -1.92% | |
55 Neutral | $1.03B | 11.96 | 6.66% | 12.69% | -15.48% | -36.45% | |
55 Neutral | $1.19B | -4.76 | -9.69% | 14.29% | 22.48% | 50.49% | |
50 Neutral | $1.03B | -30.20 | 2.10% | 11.40% | 9.46% | -111.44% |
* Real Estate Sector Average
PMT
PennyMac Mortgage
11.99
0.24
2.03%
CIM
Chimera Investment
12.33
-1.30
-9.52%
MFA
MFA Financial
9.56
0.26
2.80%
TWO
Two Harbors
11.85
0.84
7.61%
ORC
Orchid Island Capital
7.69
0.91
13.42%
FBRT
Franklin BSP Realty Trust
10.37
-1.13
-9.85%
PennyMac Mortgage Corporate Events
Business Operations and StrategyPrivate Placements and Financing
PennyMac Mortgage Issues Additional 2029 Exchangeable Senior Notes
Positive
Dec 22, 2025
On December 22, 2025, PennyMac Corp., an indirect wholly owned subsidiary of PennyMac Mortgage Investment Trust, issued an additional $75 million of its 8.500% Exchangeable Senior Notes due 2029 in a registered direct placement, bringing the total outstanding principal of this series to $366.5 million. The notes, which are senior unsecured obligations fully and unconditionally guaranteed by the trust, mature on June 1, 2029, pay semiannual interest at 8.500%, and are exchangeable at an initial rate equivalent to an exchange price of about $15.79 per common share, with certain adjustment and make-whole features tied to corporate events. PennyMac expects to use the roughly $75.6 million in net proceeds primarily to repay borrowings under secured mortgage servicing rights and servicing advance facilities, to repurchase or repay a portion of its 5.50% Exchangeable Senior Notes due 2026, and for general corporate purposes, highlighting an ongoing effort to refinance nearer-term debt and optimize its capital structure while maintaining flexibility for both debt and equity settlement upon exchange.
The most recent analyst rating on (PMT) stock is a Hold with a $13.50 price target. To see the full list of analyst forecasts on PennyMac Mortgage stock, see the PMT Stock Forecast page.
Business Operations and StrategyPrivate Placements and Financing
PennyMac Mortgage Issues $75M in Senior Notes
Neutral
Dec 16, 2025
On December 15, 2025, PennyMac Corp., a subsidiary of PennyMac Mortgage Investment Trust, issued $75 million in 8.500% Exchangeable Senior Notes due 2029. This issuance was part of a reopening of notes previously issued in May 2024, bringing the total outstanding to $291.5 million. The proceeds are intended for debt repayment and general business purposes, impacting the company’s financial strategy and potentially enhancing its market position.
The most recent analyst rating on (PMT) stock is a Hold with a $13.00 price target. To see the full list of analyst forecasts on PennyMac Mortgage stock, see the PMT Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.