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1. Company Snapshot

1.a. Company Description

PennyMac 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.

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1.b. Last Insights on PMT

PennyMac Mortgage Investment Trust's recent performance was negatively driven by its Q3 2024 earnings and revenue miss estimates. The company reported net income attributable to common shareholders of $31.0 million, or $0.36 per common share on a diluted basis, missing the Zacks Consensus Estimate of $0.37 per share. This decline in earnings was partly due to escalating medical care costs, which increased by 14.1% year-over-year, and a decrease in premium revenue growth. Additionally, the company's high medical care ratios, which increased by 14.1% year-over-year, likely hurt its Q3 earnings.

1.c. Company Highlights

2. PennyMac Mortgage Investment Trust (PMT) Earnings Report Analysis

PennyMac Mortgage Investment Trust (PMT) reported a net loss of $3 million for the second quarter of 2025, translating to -$0.04 per share, below the consensus estimate of $0.35. This loss was primarily attributed to fair value declines and a $14 million nonrecurring tax adjustment. Despite these challenges, PMT maintained its quarterly dividend at $0.40 per share, reflecting a robust 12.61% dividend yield. The company's book value per share stood at $15, providing a valuation reference point for investors.

Publication Date: Jul -23

📋 Highlights
  • Net Loss and EPS:: Reported a net loss of $3 million, or $0.04 per share, for Q2 2025.
  • Dividend Declaration:: Declared a $0.40 per share common dividend for the quarter.
  • Securitization Activity:: Completed $1.1 billion UPB in Agency-eligible loans and $339 million UPB in jumbo loans.
  • Portfolio Diversification:: 47% of equity in MSRs (3.9% weighted average coupon) and 16% in CRTs.
  • Return Potential:: Run-rate return potential increased to $0.38 per share, up from $0.35.

Portfolio Diversification and Operations

PMT's investment portfolio remains diversified, with approximately two-thirds of shareholders' equity allocated to seasoned mortgage servicing rights (MSRs) and credit risk transfer (CRT) transactions. MSRs constitute 47% of deployed equity, with a weighted average coupon of 3.9%, while CRTs, representing 16% of equity, are supported by seasoned loans with strong credit profiles. During the quarter, PMT completed three Agency-eligible investor loan securitizations totaling $1.1 billion in unpaid principal balance (UPB) and executed its first jumbo loan securitization since 2013, with a UPB of $339 million. These activities underscore PMT's strategic focus on portfolio diversification and efficient capital deployment.

Valuation Analysis

From a valuation perspective, PMT's stock is trading at a price-to-book (P/B) ratio of 0.58, suggesting potential undervaluation relative to its book value of $15 per share. However, the company's return on equity (ROE) of 6.38% and negative return on invested capital (ROIC) raise questions about profitability. The significant dividend yield of 12.61% indicates a focus on income generation, though sustainability remains a point of consideration given the net loss reported in the quarter. The price-to-earnings (P/E) ratio of 8.96 reflects moderate valuation multiples relative to earnings expectations.

Operational Highlights and Future Outlook

PMT's strategic partnership with PennyMac Financial Services (PFSI) continues to provide a competitive edge, offering access to a high-quality loan pipeline. The company's run-rate return potential improved to $0.38 per share, driven by increased investment activity in non-Agency subordinate and senior bonds. Looking ahead, PMT plans to maintain its securitization cadence, executing one Agency-eligible nonowner-occupied loan securitization per month and one jumbo loan securitization per quarter. Management expressed optimism about navigating market volatility through its diversified investment strategies and robust operational framework, positioning PMT for potential future growth in a dynamic mortgage market environment.

3. NewsRoom

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Geode Capital Management LLC Purchases 28,689 Shares of PennyMac Mortgage Investment Trust $PMT

Nov -29

Source: defenseworld.net

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Contrasting PennyMac Mortgage Investment Trust (NYSE:PMT) & Altisource Portfolio Solutions (NASDAQ:ASPS)

Nov -29

Source: defenseworld.net

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DigitalBridge Group (NYSE:DBRG) & PennyMac Mortgage Investment Trust (NYSE:PMT) Financial Review

Nov -25

Source: defenseworld.net

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PennyMac Mortgage (PMT) Crossed Above the 20-Day Moving Average: What That Means for Investors

Nov -19

Source: zacks.com

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Earnings Estimates Moving Higher for PennyMac Mortgage (PMT): Time to Buy?

Nov -14

Source: zacks.com

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PennyMac Mortgage Investment Trust Declares Fourth Quarter 2025 Dividends for Its Preferred Shares

Nov -13

Source: businesswire.com

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14% Dividend Yield Is Not Enough

Oct -31

Source: seekingalpha.com

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Best Income Stocks to Buy for Oct. 31st

Oct -31

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.54%)

6. Segments

Credit Sensitive Strategies

Expected Growth: 7.53%

PennyMac Mortgage Investment Trust's 7.53% growth in Credit Sensitive Strategies is driven by increasing mortgage originations, strong demand for credit-sensitive products, and effective risk management. Additionally, the company's diversified investment portfolio, including distressed mortgage loans and mortgage-backed securities, contributes to its growth. Furthermore, PennyMac's expertise in mortgage servicing and its ability to capitalize on market opportunities also support its growth in this segment.

Interest Rate Sensitive Strategies

Expected Growth: 4.55%

PennyMac Mortgage Investment Trust's 4.55% growth in Interest Rate Sensitive Strategies is driven by increasing mortgage servicing rights, expansion of correspondent lending, and growth in mortgage-backed securities. Additionally, the company's ability to effectively manage its hedge portfolio and optimize its funding costs also contribute to its growth.

Correspondent Production

Expected Growth: 7.05%

PennyMac Mortgage Investment Trust's Correspondent Production growth of 7.05% is driven by increasing demand for mortgage loans, expansion into new markets, and strategic partnerships. Additionally, the company's efficient operations, strong relationships with mortgage bankers, and favorable interest rate environment have contributed to this growth.

Corporate

Expected Growth: 7.03%

PennyMac Mortgage Investment Trust's 7.03% growth is driven by increasing mortgage originations, expansion into new markets, and strategic investments in mortgage servicing rights. Additionally, the company's diversified investment portfolio, strong risk management, and efficient cost structure contribute to its growth. Furthermore, the low interest rate environment and government support for the housing market also boost the company's growth prospects.

7. Detailed Products

Government Sponsored Enterprise (GSE) Securities

PennyMac Mortgage Investment Trust invests in mortgage-backed securities (MBS) issued by government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac.

Agency Mortgage-Backed Securities (MBS)

PennyMac Mortgage Investment Trust invests in mortgage-backed securities issued by government agencies such as Ginnie Mae, Fannie Mae, and Freddie Mac.

Non-Agency Mortgage-Backed Securities (MBS)

PennyMac Mortgage Investment Trust invests in mortgage-backed securities issued by private companies, not backed by the US government.

Whole Loans

PennyMac Mortgage Investment Trust purchases and holds whole loans, which are individual mortgage loans not securitized into MBS.

Mortgage Servicing Rights (MSR)

PennyMac Mortgage Investment Trust acquires and manages mortgage servicing rights, which are the rights to service mortgage loans.

8. PennyMac Mortgage Investment Trust's Porter Forces

Forces Ranking

Threat Of Substitutes

PennyMac Mortgage Investment Trust operates in a highly competitive industry, and borrowers have various options to choose from. However, the company's strong brand reputation and diversified product offerings mitigate the threat of substitutes.

Bargaining Power Of Customers

PennyMac Mortgage Investment Trust's customers are primarily institutional investors and individual investors, who have limited bargaining power due to the company's strong market position and diversified product offerings.

Bargaining Power Of Suppliers

PennyMac Mortgage Investment Trust relies on various suppliers, including mortgage originators, servicers, and other vendors. While suppliers have some bargaining power, the company's scale and diversified supply chain mitigate this risk.

Threat Of New Entrants

The mortgage investment trust industry has high barriers to entry, including regulatory requirements, capital requirements, and the need for specialized expertise. This limits the threat of new entrants.

Intensity Of Rivalry

The mortgage investment trust industry is highly competitive, with many established players competing for market share. PennyMac Mortgage Investment Trust faces intense competition from other mortgage REITs, banks, and non-bank lenders.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 84.25%
Debt Cost 8.60%
Equity Weight 15.75%
Equity Cost 11.05%
WACC 8.99%
Leverage 535.10%

11. Quality Control: PennyMac Mortgage Investment Trust passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Chicago Atlantic

A-Score: 6.7/10

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AG Mortgage Investment Trust

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PennyMac Mortgage Trust

A-Score: 6.2/10

Value: 7.6

Growth: 2.4

Quality: 5.4

Yield: 10.0

Momentum: 3.5

Volatility: 8.3

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A-Score: 6.0/10

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Growth: 2.7

Quality: 7.9

Yield: 10.0

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Lument Finance Trust

A-Score: 5.9/10

Value: 8.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

12.7$

Current Price

12.7$

Potential

-0.00%

Expected Cash-Flows