| Factor | Score | Distribution | Value | Avg | Rank |
|---|---|---|---|---|---|
Valuation | 47 | 9.6x | 17.8x | Around median | |
Growth | 84 | 13.6% | 7.1% | Top tier | |
Quality | 56 | — | — | Around median | |
Safety | 21 | — | — | Bottom tier | |
Capital Return | 34 | 1.71% | 2.12% | Bottom tier | |
Momentum | 10 | -29.7% | 2.9% | Bottom tier | |
Sentiment | 47 | 4 | 3 | Around median |
Estimates — analyst targets and a simplified DCF, not investment advice.
Ten ratios that matter, each compared against its sector median and average — so you can see whether a number is rich or cheap relative to peers in the same sector.
PennyMac Financial Services operates through an integrated mortgage banking platform that combines loan production and servicing, with production distributed across three channels: correspondent, broker direct, and consumer direct. The company generates revenue from loan originations and acquisitions and fulfillment services, as well as fees and gains from its mortgage servicing portfolio; in fiscal Q1 2026, the servicing portfolio balance reached $720 billion, while the consumer direct and broker direct channels together represented 75% of loan production revenue.
In fiscal Q2 2026, PFSI reported revenue of $242.5 million and net income of $21.7 million, equivalent to earnings per share of $0.41 and a calculated net income margin of approximately 9.0%. By comparison, fiscal Q1 2026 revenue was approximately $208.2 million, net income was $82.3 million, and earnings per share were $1.53, meaning that revenue growth between the two quarters was accompanied by a sharp decline in net profit.
Fiscal Q1 2026 details reveal a clear disparity among business units: the Production segment generated pretax income of $134 million, more than double its level a year earlier, while the Servicing segment recorded only $13 million of pretax income, or $57 million excluding valuation changes. Pretax operating income from mortgage banking activities was $190 million, while Corporate and Other activities recorded a pretax loss of $42 million.
Automated analysis for informational purposes only — not investment advice.
The average analyst price target is $89.8, within a wide range of $78 to $110, with a consensus Buy rating; the average is approximately 25% above the 52-week range low of $71.68 but approximately 44% below its high of $160.36. This positioning reflects a substantial revaluation relative to the peak, consistent with the decline in fiscal Q2 2026 earnings, the reduced return-on-equity outlook, and earnings sensitivity to interest rates and hedging, while the upside depends on realizing savings from Vesta and AI and improving recapture.
Figures in the text are as of 2026-08-31; the live price is shown at the top of the page.
PFSI reported net income of $21.7 million and earnings per share of $0.41 in fiscal Q2 2026, compared with $82.3 million and $1.53 in fiscal Q1 2026. This occurred despite revenue increasing from $208.2 million to $242.5 million between the two quarters. The provided data do not include a segment-level breakdown for fiscal Q2 2026, so the decline cannot be attributed to a specific operating item beyond what the consolidated figures show.
The company completed the rollout of Vesta for new loans in the consumer direct channel during fiscal Q1 2026 and began integrating AI agents into fulfillment operations. Management says the system reduced manual intervention and helped lower loan costs and days to close, and it expects material benefits in the second half of fiscal 2026. It also plans for the first broker loans to appear on the platform near the end of fiscal 2026, with the broker channel migration to be completed in fiscal 2027.
The first-lien conventional refinance recapture rate increased from 17% to 22% in fiscal Q1 2026, then approached 30% in April 2026. As of March 31, 2026, the company serviced $320 billion of loans carrying rates above 5%, with more than half above 6%. This base gives the company an opportunity to convert more servicing customers into new loans if interest rates decline, but persistently high rates reduce demand for originations and refinancings.
Management said on May 5, 2026, that the transaction remained on track to close during the second half of fiscal 2026. The acquisition includes a fee-based subservicing business and does not include material mortgage servicing rights, so management described it as capital-light and not requiring a change to the mortgage servicing rights portfolio hedging strategy. PFSI incurred $3 million in transaction expenses in fiscal Q1 2026 and expects increased scale and diversification after integration is completed.
The increase in the fair value of mortgage servicing rights was $177 million in fiscal Q1 2026, while hedge losses totaled $221 million. Results included $14 million in hedging costs and $44 million in mortgage servicing rights valuation declines after hedging and costs within the adjusted earnings reconciliation. The company increased its hedge ratio to approximately 100% to manage prepayment risk, but volatility in mortgage-backed securities spreads and the spread between primary and secondary markets continued to affect reported earnings.
Annualized return on equity was 8% and adjusted return was 11% in fiscal Q1 2026. Management expects adjusted returns to remain near these levels in fiscal Q2 2026, then rise to the low-to-mid teens range in the second half of fiscal 2026. The high teens to low 20% target depends on achieving technology efficiencies, increasing scale, and reducing the cost of servicing a loan to $55 annually within 24 to 36 months, outcomes that had not yet been achieved as of May 5, 2026.
