PFSI

PennyMac Financial Services Inc.

Finance/Real Estate


Presented:04/29/2020
Price:$31.47
Cap:$2.49B
Current Price:$108.95
Cap:$5.58B

Presented

Date04/29/2020
Price$31.47
Market Cap$2.49B
Ent Value$8.72B
P/E Ratio6.43x
Book Value$26.26
Div Yield0.76%
Shares O/S79.19M
Ave Daily Vol1,123,891
Short Int6.12%

Current

Price$108.95
Market Cap$5.58B
PennyMac Financial Services, Inc. is a holding company, which engages in the production and servicing of U.S. residential mortgage loans. It operates through the following segments: Production, Servicing, and Investment Management. The Production segment includes mortgage loan origination, acquisition, and sale activities. The Servicing segment offers servicing of newly originated mortgage loans; and execution and management of early buyout transactions. The Investment Management segment consists of sourcing; performing diligence; bidding and closing investment asset acquisitions; managing correspondent production activities; and managing the acquired assets. The company was founded by Stanford L. Kurland on July 2, 2008 and is headquartered in Westlake Village, CA.

Publicly traded companies mentioned herein: Mr Cooper Group Inc (COOP), PennyMac Financial Services Inc (PFSI), PennyMac Mortgage Investment Trust (PMT)

Highlights

The presenter is long PennyMac Financial Services (PFSI), which has already provided an update (3/17/20) on its expected earnings ($3.50-$4.50) for the quarter ending 3/31/20 vs. $4.89 for the year ended 12/31/19, and an original expectation for ~$4.40/share of earnings in 2020. Strong results from PFSI’s Production and Servicing segments are driving the record numbers, and with pricing getting better for the servicing of new loans, a strong liquidity position, and solid ROIC and ROE metrics, the presenter sees the potential for 1) book value to rise to the high $30s/share over the next year, and 2) a 20-25% ROE and $6 - $7 of EPS (over 12 months). At 8x - 10x earnings, the implied target range is $48 - $70, and PFSI’s exposure to other risks near-term appears to be limited.

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Idea Discussion

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