PennyMac Financial Services

PFSI

Financial - Mortgages · Financial Services

Price

$85.29

-1.53 (-1.76%)

Market Cap

$4.43B

Winston Score

Winston is curious

A decent business — some strong pillars, some weaker.

Share count falling — buybacks

−20.1% over 4y

The company has reduced its share count over this period, returning value to shareholders through buybacks.

Diluted shares outstanding: 67.5M (2021) → 53.9M (2025)

PennyMac Financial Services helps people get home loans and manages those loans over time. Its two main businesses are mortgage origination — helping homebuyers and homeowners borrow money — and mortgage servicing, which means collecting monthly payments on behalf of investors who own the loans. It is one of the largest mortgage servicers in the United States, handling hundreds of billions of dollars in home loans.

The company makes money by earning fees when it originates new loans, and by collecting ongoing servicing fees as a percentage of the loan balances it manages. It operates almost entirely in the United States and its large servicing portfolio provides a relatively steady stream of income even when new loan demand slows down. The biggest risk PennyMac faces is interest rate sensitivity — when rates rise sharply, fewer homeowners refinance, which hurts origination volume, though higher rates can also increase the value of its servicing rights, creating a partial natural hedge.

Winston Score History

Growth Profile

For growth stock investors

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

-49.1% YoY

YoY Growth Rate

Revenue declining

EPS Growth

+6.8% YoY

YoY Growth Rate

Slow EPS growth

R&D Spend

$0/ year

↓ Declining (-100% vs prior year)

0.0% of revenue

Below sector average (7%)

R&D spend declining — could signal cost-cutting or efficiency

Insider Activity

4.3%ownership

→ Flat

Insiders holding steady — not selling despite ability to

Cash Runway

~1 months

$220M cash & investments

Quarterly Free Cash Flow

↓ Burn rate worsening

Short runway — potential dilution ahead through share issuance

Cash watch

PennyMac Financial Services has less than a year of cash at its current burn rate. Growth investors should watch for potential share dilution from future fundraising — that directly reduces your ownership.

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Score breakdown

Every number that matters to educated investors.

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Quality

Gross Margin

97.4%

Premium pricing power — 97.4% gross margin

Operating Margin

53.8%

Excellent — 53.8% operating margin

ROCE

1.4%

Weak — 1.4% return on capital

ROIC between 0% and 5%. They earn a few cents back per dollar invested in the business.

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Growth

Sales YoY

+32.8%

Fast-growing sales (32.8% YoY)

EPS YoY

+43.6%

Earnings growing fast (43.6% YoY)

Earnings growing 25%+ a year. The compounder zone.

EPS Consistency

8/8 quarters

Every recent quarter grew earnings vs last year

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Cash Flow

Cash Conversion

-730%

Weak — only -730% of profit becomes cash

FCF Margin

-105.4%

Burning cash (-105.4%)

Free cash flow is negative. They are burning cash, not generating it.

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Stability

Debt / Equity

3.96

Heavy debt load (3.96)

Interest Cover

1.41x

Dangerous — barely covers interest (1.4x)

Interest coverage between 1 and 3. Profits cover interest, but with little room to spare.

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Valuation

P/E Ratio (TTM)

8.7x

Attractive valuation — P/E 8.7

P/E under 10. The price tag is small relative to last year's profit.

P/E vs Forward

+0.6

GROWING

Earnings roughly flat

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Dividends

Dividend Yield

1.44%

Small dividend — 1.44% yield

Modest yield. The bulk of any return needs to come from price appreciation.

Dividend Growth

+0.0%

Dividend flat

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