PennyMac Financial Services, Inc. (NYSE: PFSI)

Sector: Financial Services Industry: Mortgage Finance CIK: 0001745916
Market Cap 1.63 Bn
P/B 9.73
P/E 113.11
P/S 4.21
ROIC (Qtr) 1.82
Div Yield % 0.32
Rev 1y % (Qtr) 53.68
Total Debt (Qtr) 19.40 Bn
Debt/Equity (Qtr) 4.61
Add ratio to table...

About

PennyMac Financial Services, Inc. (PFSI), a notable player in the Mortgage Banking industry, operates a comprehensive mortgage platform and integrated business, primarily focused on the production and servicing of U.S. residential mortgage loans. The company's main business activities encompass loan production, servicing, and investment management. PennyMac Financial Services' primary source of revenue stems from its loan production segment, which includes correspondent production, consumer direct lending, and broker direct lending. In the correspondent...

Read more

Investment thesis

Bull case

  • Free cash flow of (1.95B) provides excellent 31.26x coverage of dividends (62.29M), indicating sustainable shareholder returns.
  • Retained earnings of 4.12B represent substantial 0.98x of equity 4.21B, indicating strong internal capital generation.
  • Cash position of 621.92M fully covers payables of 581.50M by 1.07x, showing strong vendor relationship management.
  • Tangible assets of 25.40B provide robust 632.42x coverage of receivables 40.16M, showing strong asset quality.

Bear case

  • Operating cash flow of (1.91B) barely covers its investment activities of 497.66M, with a coverage ratio of -3.84, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • The company's operating cash flow of (1.91B) shows concerning coverage of stock compensation expenses of 28.09M, with a -68.06 ratio indicating potential earnings quality issues.
  • Free cash flow of (1.95B) provides weak coverage of capital expenditures of 35.86M, with a -54.30 ratio suggesting additional external financing needs for growth initiatives.
  • Operating cash flow of (1.91B) provides minimal -40.12x coverage of tax expenses of 47.64M, suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Operating cash flow of (1.91B) barely covers operating expenses of 53.85M with a -35.50 ratio, suggesting thin operational efficiency margins and limited flexibility.

Peer comparison

Companies in the Mortgage Finance
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 FNMA Federal National Mortgage Association Fannie Mae 45.24 Bn 5,026.67 1.55 4,053.14 Bn
2 RKT Rocket Companies, Inc. 37.92 Bn -371.21 6.57 19.41 Bn
3 FMCC Federal Home Loan Mortgage Corp 27.03 Bn -346.50 1.16 3,405.02 Bn
4 WD Walker & Dunlop, Inc. 1.85 Bn 22.56 3.96 3.01 Bn
5 PFSI PennyMac Financial Services, Inc. 1.63 Bn 113.11 4.21 19.40 Bn
6 VEL Velocity Financial, Inc. 0.71 Bn 7.90 2.27 6.15 Bn
7 BETR Better Home & Finance Holding Co 0.47 Bn -2.56 3.26 0.55 Bn
8 LDI loanDepot, Inc. 0.41 Bn -5.61 0.36 4.51 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.08 -0.29
EV to Cash from Ops. EV/CFO -20.53 -306.56
EV to Debt EV to Debt 0.10 -0.16
EV to EBIT EV/EBIT 82.91 74.08
EV to EBITDA EV/EBITDA 11.04 34.17
EV to Free Cash Flow [EV/FCF] EV/FCF -19.17 16,800.36
EV to Market Cap EV to Market Cap 1.24 19.32
EV to Revenue EV/Rev 5.23 21.05
Price to Book Value [P/B] P/B 9.73 -3.89
Price to Earnings [P/E] P/E 113.11 294.11
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 8.01 7.52
Dividend Payout Ratio % Div Payout % (Qtr) 12.40 141.58
Dividend per Basic Share Div per Share (Qtr) 1.20 0.43
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -3.19 -7.23
Interest Coverage Int. cover (Qtr) 0.00 -0.52
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -70.00 -24.00
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 326.52 52.20
Dividend Growth (1y) % Div 1y % (Qtr) 33.33 1.53
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 193.21 10.22
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 114.22 393.39
EBIT Growth (1y) % EBIT 1y % (Qtr) 151.29 -7.84
EBT Growth (1y) % EBT 1y % (Qtr) 151.29 -41.79
EPS Growth (1y) % EPS 1y % (Qtr) 190.39 -5.52
FCF Growth (1y) % FCF 1y % (Qtr) 1.42 -27.18
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 34.03 15.35
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.08 0.11
Cash Payout Ratio Cash Payout (Qtr) -0.03 -0.02
Cash Ratio Cash Ratio 0.00 0.01
Current Ratio Current Ratio 0.00 0.01
Debt to Equity Ratio Debt/Equity (Qtr) 4.61 15.84
Interest Cover Ratio Int Coverage (Qtr) 0.00 -0.52
Times Interest Earned Times Interest Earned (Qtr) 0.00 -0.52
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 31.10 18.97
EBIT Margin % EBIT Margin % (Qtr) 27.61 -17.72
EBT Margin % EBT Margin % (Qtr) 27.61 -17.90
Gross Margin % Gross Margin % (Qtr) 94.10 72.92
Net Profit Margin % Net Margin % (Qtr) 25.20 -25.85