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PennyMac Mortgage (PMT)
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PennyMac Mortgage (PMT) AI Stock Analysis

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PMT

PennyMac Mortgage

(NYSE:PMT)

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Neutral 54 (OpenAI - 4o)
Rating:54Neutral
Price Target:
$12.50
▼(-0.08% Downside)
PennyMac Mortgage's overall stock score reflects significant financial challenges, including declining revenues and high leverage, which are the most impactful factors. The technical indicators are neutral, and the valuation is attractive due to a high dividend yield. The earnings call highlighted both positive securitization activities and challenges from net losses and interest rate volatility.
Positive Factors
Successful Securitizations
Successful securitizations enhance liquidity and capital efficiency, enabling PennyMac to reinvest in growth opportunities and stabilize cash flows.
Increased Correspondent Loan Acquisition Volume
Rising loan acquisition volumes indicate strong demand and operational capacity, supporting revenue growth and market positioning in the mortgage sector.
Stable MSR Investments
Stable MSR investments provide predictable income streams, reducing volatility in earnings and supporting long-term financial stability.
Negative Factors
High Leverage
High leverage limits financial flexibility and increases vulnerability to economic shifts, potentially impacting long-term growth and stability.
Negative Cash Flows
Negative cash flows indicate potential liquidity issues, hindering the company's ability to invest in growth and manage debt obligations effectively.
Interest Rate Volatility
Interest rate volatility complicates investment strategies and can lead to unpredictable earnings, affecting long-term financial planning and stability.

PennyMac Mortgage (PMT) vs. SPDR S&P 500 ETF (SPY)

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:Jul 22, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed sentiment with successful securitizations and growth in loan acquisition as significant positives, while the net loss and interest rate volatility posed challenges.
Q2-2025 Updates
Positive Updates
Successful Securitizations
Completed three securitizations of Agency-eligible investor loans totaling $1.1 billion in UPB and first jumbo loan securitization since 2013 with a total UPB of $339 million.
Growth in Nonowner-Occupied and Jumbo Loans
Increasing volume of nonowner-occupied and jumbo loans generated by the PennyMac platform, highlighting potential for future investment.
Robust Private Label Securitization Market
PennyMac has become a leading issuer of private label securitizations, completing nine securitizations totaling $3.2 billion in UPB since Q4 2024.
Stable MSR Investments
MSR investments account for approximately 47% of deployed equity with stable cash flows expected due to low refinancing incentives.
Increased Correspondent Loan Acquisition Volume
Total correspondent loan acquisition volume was $30 billion in Q2, up 30% from the prior quarter.
Negative Updates
Net Loss to Common Shareholders
Reported a net loss to common shareholders of $3 million or negative $0.04 per diluted common share due to fair value declines and a $14 million nonrecurring tax adjustment.
Interest Rate Volatility
Interest rates were extremely volatile, with the 10-year treasury yield traversing a range of more than 70 basis points, creating a challenging environment for investment strategies.
Pretax Loss in Interest Rate Sensitive Strategies
Interest Rate Sensitive Strategies contributed a pretax loss of $5 million, with fair value increases on MSR investments offset by declines in MBS and interest rate hedges.
Decreased Retention of Conventional Correspondent Production
PMT retained 17% total conventional Correspondent Production in Q2, down from 21% in the first quarter.
Company Guidance
During the second quarter of 2025, PennyMac Mortgage Investment Trust (PMT) reported a net loss to common shareholders of $3 million, or a loss per share of $0.04, primarily due to market-driven value changes and a $14 million nonrecurring tax adjustment. Despite the loss, PMT declared a common dividend of $0.40 per share, with a book value per share of $15 as of June 30. The company successfully completed three securitizations of Agency-eligible investor loans totaling $1.1 billion in UPB and a jumbo loan securitization totaling $339 million in UPB. PMT retained $71 million and $82 million of new investments from these securitizations, respectively. The company remains committed to executing one securitization of Agency-eligible nonowner-occupied loans per month and one jumbo loan securitization per quarter. Approximately two-thirds of PMT's shareholders' equity is invested in MSRs and GSE lender risk share transactions, with MSR investments accounting for 47% of deployed equity. PMT's current run rate reflects a quarterly average of $0.38 per share, an increase from $0.35 per share in the prior quarter, driven by increased investment activity and improved performance in Correspondent Production. The company issued $105 million in unsecured senior notes due in 2030 and plans to retire $345 million in exchangeable senior notes due in 2026 closer to maturity.

PennyMac Mortgage Financial Statement Overview

Summary
PennyMac Mortgage is facing financial challenges with declining revenues, high leverage, and negative cash flows. Despite strong gross profit and EBITDA margins, profitability is hindered by significant EBIT losses. The high debt burden may limit financial flexibility.
Income Statement
45
Neutral
PennyMac Mortgage faced challenges in maintaining revenue stability, with a significant drop in total revenue to $406 million TTM from $725 million the previous year. The Gross Profit Margin is strong at 90.14%, indicating efficient cost management. However, the negative EBIT margin of -52.61% and the drop in net income to $123 million signal profitability issues. The EBITDA margin remains robust at 201.05%, showing good operational performance despite the earnings loss.
Balance Sheet
50
Neutral
The debt-to-equity ratio of 1.82 suggests a high level of leverage, which could pose risks in economic downturns. The equity ratio is relatively low at 12.79%, indicating limited reliance on equity financing. Return on Equity (ROE) is positive at 6.47%, reflecting some profitability. The company's high debt levels could affect future growth and financial stability.
Cash Flow
40
Negative
The cash flow analysis shows challenges, with a negative free cash flow of -$2.97 billion TTM. Operating cash flow is negative, indicating potential cash management issues. Both operating and free cash flow ratios to net income are concerning, suggesting the company is struggling to convert earnings into cash effectively. This could impact liquidity and operational flexibility.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue269.36M14.72M725.87M-145.66M1.32B1.47B
Gross Profit213.96M1.94M603.76M-321.20M985.98M1.11B
EBITDA1.09B1.03B1.28B26.33M688.32M1.29B
Net Income105.16M160.98M199.65M-73.29M56.85M52.37M
Balance Sheet
Total Assets16.80B14.41B13.11B13.92B13.77B11.52B
Cash, Cash Equivalents and Short-Term Investments471.49M337.69M409.42M364.14M1.93B2.98B
Total Debt14.55B12.13B4.85B11.57B11.22B2.27B
Total Liabilities14.94B12.47B11.16B11.96B11.41B9.22B
Stockholders Equity1.87B1.94B1.96B1.96B2.37B2.30B
Cash Flow
Free Cash Flow-5.22B-2.73B1.33B1.78B-2.79B671.66M
Operating Cash Flow-5.21B-2.70B1.34B1.78B-2.82B671.66M
Investing Cash Flow910.06M1.36B-21.73M-1.87B1.09B-15.37M
Financing Cash Flow4.54B1.40B-1.15B135.89M1.73B-702.64M

PennyMac Mortgage Technical Analysis

Technical Analysis Sentiment
Positive
Last Price12.51
Price Trends
50DMA
12.20
Positive
100DMA
12.27
Positive
200DMA
12.45
Positive
Market Momentum
MACD
>-0.01
Negative
RSI
60.66
Neutral
STOCH
80.36
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PMT, the sentiment is Positive. The current price of 12.51 is above the 20-day moving average (MA) of 12.26, above the 50-day MA of 12.20, and above the 200-day MA of 12.45, indicating a bullish trend. The MACD of >-0.01 indicates Negative momentum. The RSI at 60.66 is Neutral, neither overbought nor oversold. The STOCH value of 80.36 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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

Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
71
Outperform
$895.15M11.114.55%12.63%-3.60%19.31%
63
Neutral
$1.09B10.5711.03%4.83%-25.07%
62
Neutral
$953.79M10.5015.39%-7.70%40.36%
61
Neutral
$1.05B35.8620.03%67.17%
54
Neutral
$1.06B16.795.50%12.79%1.71%-56.69%
52
Neutral
$1.06B-2.86-16.52%17.14%-21.95%-528.94%
65
Neutral
$2.17B12.193.79%4.94%3.15%1.96%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PMT
PennyMac Mortgage
12.51
-0.05
-0.40%
CIM
Chimera Investment
13.42
-0.36
-2.61%
MFA
MFA Financial
9.29
-1.26
-11.94%
TWO
Two Harbors
10.15
-1.48
-12.73%
ORC
Orchid Island Capital
7.19
0.58
8.77%
FBRT
Franklin BSP Realty Trust
10.88
-0.46
-4.06%
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.Date of analysis: Oct 01, 2025