PennyMac Financial Services, Inc. (PFSI)
Valuation Overview•Is PennyMac Financial Services, Inc. Overvalued or Undervalued?
Trading at a discount across both intrinsic cash flow and relative peer multiples, indicating a strong margin of safety.
Fragile underlying quality score of 45/100; weak margins or elevated debt leverage warrant caution.
Analysts remain bullish, forecasting further upside expansion with consensus targets suggesting solid gains.
Verdict: Average quality business weighed down by significant solvency concerns.
Wall Street is highly bullish, projecting significant upside with steady expected earnings growth. However, capital return yields remain modest, anchored by a strong, well-covered dividend yield.
PFSI demonstrates adequate business quality with stable profitability. However, this is severely offset by a highly leveraged balance sheet (Debt/EBITDA > 4.0x) and elevated financial risk.
The company maintains stable top-line performance paired with stable bottom-line earnings. This growth is supported by elite operational efficiency, sustaining an impressive 28.3% operating margin.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $545.0M | +173.8% | — | — | +18.8% | |
| EBITDA | $293.1M | — | +27.0% | — | — | |
| Net Income | $82.3M | +60.9% | +1.8% | — | +26.6% | |
| EPS (Diluted) | $1.53 | +59.2% | +3.0% | -15.0% | +15.7% | |
| Free Cash Flow | -$1.3B | +69.0% | — | +25.8% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 70.5% | 76.9% | 69.4% | 63.1% |
| Operating Margin | 28.3% | 36.2% | 35.3% | 35.7% |
| Net Margin | 14.3% | 12.7% | 17.4% | 17.5% |
| FCF Margin | -108.1% | -132.5% | -14.2% | -52.6% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $2.22 | $2.19 | -1.4% | ||
| Q1'26 | $3.23 | $1.97 | -39.0% | ||
| Q4'25 | $2.70 | $3.37 | +24.8% | ||
| Q3'25 | $3.01 | $1.02 | -66.1% | ||
| Q2'25 | $2.99 | $1.42 | -52.5% | ||
| Q1'25 | $3.09 | $2.88 | -6.8% | ||
| Q4'24 | $2.92 | $3.49 | +19.5% | ||
| Q3'24 | $2.65 | $2.67 | +0.8% |
Total return is -11.7% (1Y), lagging the benchmark by -36.7%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | -36.9% | -46.2% | — |
| 1Y | -11.7% | -36.7% | +1.3% |
| 3YCAGR | +7.4% | -12.7% | +4.6% |
| 5YCAGR | +6.9% | -6.3% | +7.7% |
| 10YCAGR | +20.6% | +7.0% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about PennyMac Financial Services, Inc. (PFSI) valuation, health, and returns.
PennyMac Financial Services, Inc. is estimated to be undervalued under our discounted cash flow framework. relative multiples indicate the stock is Cheap versus peers compared to industry peers. undervalued (implying +28.1% upside to DCF intrinsic value of $105.54)
PennyMac Financial Services, Inc. has multiple valuation anchors: DCF Intrinsic Value: $105.54 | Peer Relative Fair Value: $128.86 | Wall Street Analyst Target: $118.80 (implying +44.2% upside). A convergence of these signals offers higher conviction.
PennyMac Financial Services, Inc. displays fair financial health with a composite quality score of 45/100, supported by a Piotroski F-Score of 4/9, Return on Invested Capital (ROIC) of 4.4%.
PennyMac Financial Services, Inc. pays a 1.4% dividend yield, covered by a 12% payout ratio with 2 years of growth, supplemented by a 0.1% buyback yield.
PennyMac Financial Services, Inc.'s current growth trajectory is Accelerating. The company achieved +173.8% 1Y revenue growth and +59.2% 1Y EPS growth, compared to its 3Y revenue CAGR of N/A.
Wall Street consensus is Buy based on 20 analysts, beating EPS expectations in 50% of recent quarters with a -2-quarter streak. The consensus price target represents a +44.2% change from current levels.
Investment risks for PennyMac Financial Services, Inc. include: -50.1% 1-year max drawdown. Volatility risk is characterized by a beta of 0.86x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.