NYSE:PFSI

Stock Analysis Report

PennyMac Financial Services

Executive Summary

PennyMac Financial Services, Inc., through its subsidiaries, engages in the mortgage banking and investment management activities in the United States.

Rewards

Trading at 82.7% below its fair value

Earnings are forecast to grow 2.46% per year

Earnings grew by 348.1% over the past year

Risk Analysis

High level of non-cash earnings

Shareholders have been substantially diluted in the past year

Unstable dividend track record

Highly volatile share price over past 3 months



Snowflake Analysis

Undervalued with proven track record.


Similar Companies

Share Price & News

How has PennyMac Financial Services's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: PFSI's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-9.7%

PFSI

-13.0%

US Mortgage

-2.6%

US Market


1 Year Return

-11.4%

PFSI

-36.4%

US Mortgage

-13.3%

US Market

Return vs Industry: PFSI exceeded the US Mortgage industry which returned -33.4% over the past year.

Return vs Market: PFSI underperformed the US Market which returned -14.9% over the past year.


Shareholder returns

PFSIIndustryMarket
7 Day-9.7%-13.0%-2.6%
30 Day-46.8%-36.1%-15.2%
90 Day-39.8%-41.2%-22.2%
1 Year-10.7%-11.4%-34.9%-36.4%-11.5%-13.3%
3 Year19.7%16.7%-28.7%-33.7%13.2%5.7%
5 Year17.8%14.8%-11.1%-20.9%31.8%17.2%

Price Volatility Vs. Market

How volatile is PennyMac Financial Services's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is PennyMac Financial Services undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: PFSI ($17.91) is trading below our estimate of fair value ($103.37)

Significantly Below Fair Value: PFSI is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: PFSI is good value based on its PE Ratio (3.6x) compared to the Mortgage industry average (10x).

PE vs Market: PFSI is good value based on its PE Ratio (3.6x) compared to the US market (12.5x).


Price to Earnings Growth Ratio

PEG Ratio: PFSI is poor value based on its PEG Ratio (1.5x)


Price to Book Ratio

PB vs Industry: PFSI is good value based on its PB Ratio (0.7x) compared to the US Mortgage industry average (0.8x).


Next Steps

Future Growth

How is PennyMac Financial Services forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

2.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PFSI's forecast earnings growth (2.5% per year) is above the savings rate (1.7%).

Earnings vs Market: PFSI's earnings (2.5% per year) are forecast to grow slower than the US market (12.2% per year).

High Growth Earnings: PFSI's earnings are forecast to grow, but not significantly.

Revenue vs Market: PFSI's revenue is expected to decline over the next 3 years (-9% per year).

High Growth Revenue: PFSI's revenue is forecast to decline over the next 3 years (-9% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: PFSI's Return on Equity is forecast to be low in 3 years time (13.8%).


Next Steps

Past Performance

How has PennyMac Financial Services performed over the past 5 years?

43.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: PFSI has a high level of non-cash earnings.

Growing Profit Margin: PFSI's current net profit margins (19.1%) are higher than last year (7.1%).


Past Earnings Growth Analysis

Earnings Trend: PFSI's earnings have grown significantly by 43.5% per year over the past 5 years.

Accelerating Growth: PFSI's earnings growth over the past year (348.1%) exceeds its 5-year average (43.5% per year).

Earnings vs Industry: PFSI earnings growth over the past year (348.1%) exceeded the Mortgage industry 10.9%.


Return on Equity

High ROE: PFSI's Return on Equity (19.1%) is considered low.


Next Steps

Financial Health

How is PennyMac Financial Services's financial position?


Financial Position Analysis

Short Term Liabilities: PFSI's short term assets ($6.8B) exceed its short term liabilities ($5.9B).

Long Term Liabilities: PFSI's short term assets ($6.8B) exceed its long term liabilities ($2.2B).


Debt to Equity History and Analysis

Debt Level: PFSI's debt to equity ratio (348.3%) is considered high.

Reducing Debt: PFSI's debt to equity ratio has increased from 171.6% to 348.3% over the past 5 years.

Debt Coverage: PFSI's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: Insufficient data to determine if PFSI's interest payments on its debt are well covered by EBIT.


Balance Sheet


Next Steps

Dividend

What is PennyMac Financial Services's current dividend yield, its reliability and sustainability?

2.40%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: PFSI's dividend (2.68%) is higher than the bottom 25% of dividend payers in the US market (2.04%).

High Dividend: PFSI's dividend (2.68%) is low compared to the top 25% of dividend payers in the US market (5.7%).


Stability and Growth of Payments

Stable Dividend: Too early to tell whether PFSI's dividend payments have been stable as they only just started paying a dividend.

Growing Dividend: Too early to tell if PFSI's dividend payments are increasing as they only just started paying a dividend.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (4.8%), PFSI's dividend payments are thoroughly covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: PFSI's dividends in 3 years are forecast to be thoroughly covered by earnings (9.4% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

3.3yrs

Average management tenure


CEO

David Spector (56yo)

3.25s

Tenure

US$5,777,619

Compensation

Mr. David A. Spector has been the President and Chief Executive Officer of PennyMac Financial Services, Inc. since February 2013 and January 1, 2017 respectively. Mr. Spector has been Chief Executive Offic ...


CEO Compensation Analysis

Compensation vs Market: David's total compensation ($USD5.78M) is about average for companies of similar size in the US market ($USD4.70M).

Compensation vs Earnings: David's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
David Spector
President3.25yrsUS$5.78m2.2% $34.8m
Andrew Chang
Senior MD & CFO3.25yrsUS$2.26m1.25% $19.8m
Vandad Fartaj
Senior MD & Chief Investment Officer1.58yrsUS$2.51m0.074% $1.2m
Douglas Jones
Senior MD & Chief Mortgage Banking Officer7.17yrsUS$3.32m0.95% $15.0m
Jeffrey Grogin
Senior MD & Chief Enterprise Operations Officerno datano data0.68% $10.8m
Gregory Hendry
Chief Accounting Officerno datano data0.049% $779.6k
Lior Ofir
Senior MD & Chief Information Officerno datano datano data
Isaac Garden
Vice President of Investor Relationsno datano datano data
Derek Stark
Senior MDno datano datano data
Steven Bailey
Chief Mortgage Operations Officer & Senior Management Director7.17yrsno datano data

3.3yrs

Average Tenure

57yo

Average Age

Experienced Management: PFSI's management team is considered experienced (3.3 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
David Spector
President3.25yrsUS$5.78m2.2% $34.8m
Stanford Kurland
Non-Executive Chairman of the Board7.17yrsUS$8.87m10.65% $168.3m
Joseph Mazzella
Independent Director7.33yrsUS$192.57k0.83% $13.1m
Matthew Botein
Independent Director7.33yrsUS$199.57k0.51% $8.1m
James C. Hunt
Independent Lead Directorno dataUS$234.95k0.086% $1.4m
Anne McCallion
Director2.17yrsUS$2.15m0.29% $4.6m
Emily Youssouf
Independent Director6.42yrsUS$209.07k0.031% $490.9k
Farhad Nanji
Independent Director7.33yrsUS$199.57k0.23% $3.6m
Patrick Kinsella
Independent Director5.75yrsUS$221.07k0.046% $720.5k
Theodore Tozer
Independent Director2.67yrsUS$203.82k0.0044% $70.2k

7.2yrs

Average Tenure

64.5yo

Average Age

Experienced Board: PFSI's board of directors are considered experienced (7.2 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: PFSI insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been substantially diluted in the past year, with total shares outstanding growing by 133.3%.


Top Shareholders

Company Information

PennyMac Financial Services, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: PennyMac Financial Services, Inc.
  • Ticker: PFSI
  • Exchange: NYSE
  • Founded: 2008
  • Industry: Thrifts and Mortgage Finance
  • Sector: Banks
  • Market Cap: US$1.581b
  • Shares outstanding: 79.19m
  • Website: https://ir.pennymacfinancial.com

Number of Employees


Location

  • PennyMac Financial Services, Inc.
  • 3043 Townsgate Road
  • Westlake Village
  • California
  • 91361
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
PFSINYSE (New York Stock Exchange)YesCommon StockUSUSDMay 2013
1ACDB (Deutsche Boerse AG)YesCommon StockDEEURMay 2013

Biography

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: Loan Production, Loan Servicing, and Investment Management. The Loan Production segment is involved in the origination, acquisition, and sale of mortgage loans. This segment originates first-lien residential conventional and government-insured or guaranteed mortgage loans. The Loan Servicing segment engages in the servicing of newly originated mortgage loans, and execution and management of early buyout 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 mortgagors; and supervising foreclosures and property dispositions. This segment also services conventional and government-insured or guaranteed loans; and distressed mortgage loans that have been acquired as investments by its advised entities. 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 the acquired assets. PennyMac Financial Services, Inc. was founded in 2008 and is headquartered in Westlake Village, California. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/04/07 04:41
End of Day Share Price2020/04/06 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.