PennyMac Mortgage Investment Trust posts Q3 net loss as income drops 63%

Overview

• U.S. mortgage REIT reported Q3 net loss and lower net investment income year-over-year

• Adjusted EPS for Q3 rose sequentially but fell 5% from a year ago

• Board increased share repurchase authorization by $130 mln, with over $200 mln now available

Outlook

• Company expects to decrease current dividend in favor of share repurchases

• Company expects investments from private-label securitizations to deliver low-to-mid-teens ROEs

Result Drivers

• MARKET CONDITIONS - Co said widening mortgage spreads and rising benchmark interest rates pressured portfolio fair value and reduced book value by 5%

• PORTFOLIO ROTATION - Co said it rotated capital from lower-yielding assets into higher-returning credit investments, including private-label securitizations

• SEGMENT PERFORMANCE - Interest rate sensitive strategies segment saw higher pretax income driven by increased income excluding market-driven value changes, while credit sensitive strategies segment posted losses due to wider credit spreads and higher rates

Company press release:

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 2 "strong buy" or "buy", 7 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the specialized reits peer group is "buy."

• Wall Street's median 12-month price target for PennyMac Mortgage Investment Trust is $10.00, about 37.6% above its October 28 closing price of $7.27

• The stock recently traded at 6 times the next 12-month earnings vs. a P/E of 8 three months ago

Reuters Recommended Reads

• Oct 28 - Franklin BSP Realty Trust posts Q3 net loss on credit losses

• Oct 29 - Blackstone Mortgage Trust posts Q3 loss

• Oct 28 - KKR Real Estate Finance Trust posts smaller Q3 loss on strong loan repayments

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)