PennyMac Mortgage Investment Trust (
is a specialty finance company that invests primarily in
residential mortgage loans and mortgage-related assets. The
company operates as a REIT for tax purposes. PMT is an externally
managed by PNMAC Capital Management LLC, an investment adviser.
PENNYMAC MORTGE (PMT): Free Stock Analysis
To read this article on Zacks.com click here.
PennyMac invests in residential mortgage-related opportunities
including mortgage loans, mortgage servicing rights and
mortgage-backed securities. It invests in both newly originated
prime mortgage loans and distressed mortgage loans.
Disappointing Third Quarter Results
PMT reported its Q3 results on November 6, 2013. The company
reported net income of $39.7 million, or $0.57 per diluted share,
for the quarter, down 27% from the prior quarter. The
results missed the Zacks Consensus Estimate of $0.66 per share by
Results were affected by higher mortgage rates which resulted in
a significant slowdown in refinance activity and contraction in
the mortgage origination market.
ROE declined to 11% from 18% in the prior quarter but the book
value increased to $21.22 from $21.06 in the prior quarter.
Due to disappointing results, quarterly and annual estimates have
been revised sharply downwards in the past few weeks by analysts.
Zacks Consensus Estimates for the current and next fiscal year
now stand at $2.91 per share and $2.82 per share, from $3.16 per
share and $3.18 per share, 60 days ago. Declining estimates sent
PMT to a Zacks Rank # 5 (Strong Sell) last month. PMT also has a
longer-term Zacks recommendation of "Underperform".
The Zacks Price and Consensus chart shows the decline in
estimates and the corresponding drop in the share price.
The Bottom Line
While the company has a strong pipeline of distressed assets
purchased at significant discounts to par, a difficult and highly
competitive origination environment will continue to pose
headwinds. Further, a brightening economy and rising rate
environment do not bode well for the profitability of the
Investors looking for plays on Real Estate operations industry
could consider FirstService Corporation (FSRV), which has a Zacks
rank of 1 (Strong Buy) and an "Outperform" recommendation. The
company is one of the largest property managers in the world with
more than 2.3 billion square feet of residential and commercial
properties under management.
Want the latest recommendations from Zacks Investment Research?
Today, you can download
7 Best Stocks for the Next 30 Days
Click to get this free report >>