PennyMac Financial Services Q3 adj. pretax profit beats estimates; expects mortgage demand to stay subdued
Overview
U.S. mortgage lender's Q3 adjusted pretax profit beat analyst expectations
Q3 net income fell sharply year-over-year
Servicing segment profitable, production segment posted pretax loss amid industry contraction
Kevin Ryan, currently Chief Strategy Officer, will be CFO from Jan 1
Outlook
Company expects fourth-quarter adjusted ROE to remain near current levels
Company expects mortgage demand to remain subdued due to higher interest rates
Company expects annualized operating expenses to decline by $160 mln by Q1 2027
Result Drivers
SERVICING PROFITABILITY - Co said servicing segment delivered strong profitability, offsetting weakness in production segment, per CEO David Spector
COST REDUCTIONS - Co said it is implementing aggressive expense reductions in response to subdued mortgage demand and higher rates
LOWER ORIGINATION VOLUMES - Co attributed production segment revenue declines to lower refinance volumes and a smaller, more competitive origination market
Company press release:
Key Details
Metric | Beat/Miss | Actual | Consensus Estimate |
Q3 Net Income | $29 mln | ||
Q3 Adjusted Pretax Profit | Beat | $132 mln | $124.38 mln (5 Analysts) |
Q3 Dividend | $0.30 |
Analyst Coverage
The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 4 "strong buy" or "buy", 4 "hold" and no "sell" or "strong sell"
The average consensus recommendation for the banks peer group is "buy"
Wall Street's median 12-month price target for PennyMac Financial Services, Inc. is $90.00, about 41.9% above its October 28 closing price of $63.42
The stock recently traded at 7 times the next 12-month earnings vs. a P/E of 7 three months ago
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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.)