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

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PMT

PennyMac Mortgage

(NYSE:PMT)

Rating:56Neutral
Price Target:
$12.50
▲(2.38%Upside)
The overall stock score of 55.75 reflects a mixed outlook. Financial performance is the most significant drag, with challenges in revenue stability and cash flow management. However, the stable technical indicators and high dividend yield provide some support. The company's strategic initiatives in securitizations and successful corporate events also contribute positively to the score.
Positive Factors
Dividend Potential
There could also be a growing near-term case for the equity if it manages to raise the dividend to align with accretive returns from completing more private-label securitizations.
Securitization Strategy
The company just issued its third securitization this year of Agency-eligible investor property loans, taking advantage of the relatively high guarantee fees being charged by the GSEs.
Stock Rally
The stock rallied on good earnings results.
Negative Factors
Dividend Yield Comparison
The dividend yield at 12% remains lower than in the other REIT-servicers Annaly and Two Harbors.
Loan Origination Volume
Origination volume declined sequentially to $3.5 billion of correspondent loans acquired for PMT.
Prepayment Sensitivity
The stock valuation reflects the higher prepayment sensitivity, while there could be near-term upside from raising the dividend.

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 Mortgage Investment Trust (PMT) generates revenue through several key streams. Primarily, the company earns money by investing in residential mortgage-backed securities (RMBS) and related mortgage assets, which provide interest income. PMT also gains from credit risk transfer investments, where it assumes a portion of the credit risk on specific mortgage loans in exchange for premium payments. Additionally, the company benefits from mortgage servicing rights (MSRs), which generate fee income from servicing and managing mortgage loans. PMT's business model is further supported by strategic partnerships and its ability to leverage market opportunities to optimize its investment portfolio, thereby enhancing its revenue potential.

PennyMac Mortgage Earnings Call Summary

Earnings Call Date:Jul 22, 2025
(Q2-2025)
|
% Change Since: -3.78%|
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a balanced view with significant achievements in securitizations and credit performance, offset by a net loss and challenges from interest rate volatility and a nonrecurring tax adjustment.
Q2-2025 Updates
Positive Updates
Successful Securitizations
In the second quarter, PMT completed three securitizations of Agency-eligible investor loans totaling $1.1 billion in UPB and a jumbo loan securitization with a total UPB of $339 million. This highlights PMT's strong position as a leading issuer of private label securitizations.
Strong Credit Performance
PMT's credit risk transfer investments have low delinquencies due to strong consumer credit and substantial home equity, with a low weighted average current loan-to-value ratio below 50%.
Increased Correspondent Loan Acquisition
Total correspondent loan acquisition volume was $30 billion in the second quarter, up 30% from the prior quarter.
Improved Run Rate Return Potential
The run rate return potential for the next four quarters is expected to be $0.38 per share, up from $0.35 per share in the prior quarter.
Negative Updates
Net Loss to Common Shareholders
PMT reported a net loss to common shareholders of $3 million or a loss per share of $0.04 for the second quarter.
Volatile Interest Rate Environment
The quarter experienced extreme volatility in interest rates, with the 10-year treasury yield traversing a range of over 70 basis points, challenging investment strategies.
Nonrecurring Tax Adjustment
A $14 million nonrecurring tax adjustment impacted the financial results due to changes in state apportionment legislation.
Decreased Book Value
Book value per share at June 30 was $15, down modestly from March 31.
Company Guidance
In the second quarter of 2025, PennyMac Mortgage Investment Trust (PMT) reported a net loss of $3 million to common shareholders, translating to a loss per share of $0.04, primarily due to fair value declines and a $14 million nonrecurring tax adjustment. Despite these challenges, PMT declared a common dividend of $0.40 per share and maintained a book value per share of $15 as of June 30, down slightly from March 31. PMT's investment strategy remained robust, with three securitizations of Agency-eligible investor loans totaling $1.1 billion in UPB and the completion of its first jumbo loan securitization since 2013, amounting to $339 million in UPB. The company's diverse portfolio and strategic partnership with PFSI facilitated strong investment opportunities, allowing PMT to retain $71 million and $82 million in new investments from these transactions, respectively. PMT's run rate return potential is projected to average $0.38 per share over the next four quarters, up from $0.35 in the prior quarter, driven by increased investment in non-Agency bonds and improved performance in its Correspondent Production segment.

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.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue14.72M725.87M-145.66M1.32B1.47B
Gross Profit1.94M603.76M-321.20M985.98M1.11B
EBITDA1.03B1.28B26.33M688.32M1.29B
Net Income160.98M199.65M-73.29M56.85M52.37M
Balance Sheet
Total Assets14.41B13.11B13.92B13.77B11.52B
Cash, Cash Equivalents and Short-Term Investments337.69M409.42M364.14M1.93B2.98B
Total Debt12.13B4.85B11.57B11.22B2.27B
Total Liabilities12.47B11.16B11.96B11.41B9.22B
Stockholders Equity1.94B1.96B1.96B2.37B2.30B
Cash Flow
Free Cash Flow-2.73B1.33B1.78B-2.79B671.66M
Operating Cash Flow-2.73B1.34B1.78B-2.82B671.66M
Investing Cash Flow1.36B-21.73M-1.87B1.09B-15.37M
Financing Cash Flow1.40B-1.15B135.89M1.73B-702.64M

PennyMac Mortgage Technical Analysis

Technical Analysis Sentiment
Negative
Last Price12.21
Price Trends
50DMA
12.35
Positive
100DMA
12.64
Negative
200DMA
12.49
Negative
Market Momentum
MACD
0.07
Positive
RSI
45.93
Neutral
STOCH
62.75
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 12.21 is below the 20-day moving average (MA) of 12.64, below the 50-day MA of 12.35, and below the 200-day MA of 12.49, indicating a neutral trend. The MACD of 0.07 indicates Positive momentum. The RSI at 45.93 is Neutral, neither overbought nor oversold. The STOCH value of 62.75 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

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
66
Neutral
$1.37B0.41%10.14%-14.98%95.53%
65
Neutral
$1.25B9.599.59%11.93%11.91%52.26%
63
Neutral
kr15.32B19.412.22%2.68%1.59%146.99%
60
Neutral
$1.37B16.284.93%14.52%73.74%-34.10%
56
Neutral
$1.08B17.055.51%12.91%-2.04%-56.57%
53
Neutral
$1.09B5.06-14.70%16.84%-18.22%-114.40%
48
Neutral
$1.52B8.01-2.04%17.32%142.18%50.74%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PMT
PennyMac Mortgage
12.21
0.15
1.24%
ARI
Apollo Real Estate
9.76
0.10
1.04%
ARR
ARMOUR Residential REIT
16.63
-0.89
-5.08%
DX
Dynex Capital
12.67
2.19
20.90%
EFC
Ellington Financial
13.08
1.73
15.24%
TWO
Two Harbors
10.33
-1.53
-12.90%

PennyMac Mortgage Corporate Events

Executive/Board ChangesShareholder Meetings
PennyMac Mortgage Holds Successful Annual Shareholder Meeting
Positive
Jun 25, 2025

On June 24, 2025, PennyMac Mortgage Investment Trust held its Annual Meeting of Shareholders to elect three Class I trustees, ratify Deloitte & Touche LLP as the independent accounting firm for 2025, and approve executive compensation. The meeting saw 81.9% of eligible shares represented, with significant support for the trustee nominees and the ratification of the accounting firm, reflecting shareholder confidence in the company’s governance and strategic direction.

The most recent analyst rating on (PMT) stock is a Buy with a $15.50 price target. To see the full list of analyst forecasts on PennyMac Mortgage stock, see the PMT Stock Forecast page.

Delistings and Listing ChangesPrivate Placements and Financing
PennyMac Mortgage Closes $105M Senior Notes Offering
Positive
Jun 10, 2025

On June 10, 2025, PennyMac Mortgage Investment Trust successfully closed a public offering of $105 million in 9.00% Senior Notes due 2030, including a partial exercise of an over-allotment option. The Notes, guaranteed by PennyMac Corp., are set to mature in 2030 and have been approved for listing on the New York Stock Exchange under the symbol ‘PMTW’. The offering, underwritten by major financial firms, is expected to generate net proceeds of approximately $101 million, which could increase if the remaining over-allotment option is exercised.

The most recent analyst rating on (PMT) stock is a Buy with a $15.50 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.Date of analysis: Jul 26, 2025