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Are Investors Undervaluing PennyMac Mortgage (PMT) Right Now?

Zacks Equity Research
·2 mins read

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

PennyMac Mortgage (PMT) is a stock many investors are watching right now. PMT is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

Investors will also notice that PMT has a PEG ratio of 1.89. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. PMT's industry currently sports an average PEG of 2.50. Over the past 52 weeks, PMT's PEG has been as high as 2.37 and as low as 1.82, with a median of 2.09.

Finally, investors will want to recognize that PMT has a P/CF ratio of 2.15. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. PMT's current P/CF looks attractive when compared to its industry's average P/CF of 7. Within the past 12 months, PMT's P/CF has been as high as 10.77 and as low as 0.95, with a median of 10.05.

These are only a few of the key metrics included in PennyMac Mortgage's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, PMT looks like an impressive value stock at the moment.


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Zacks Investment Research