U.S. Markets closed

Is PennyMac Financial (PFSI) Stock Undervalued Right Now?

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

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.

One stock to keep an eye on is PennyMac Financial (PFSI). PFSI is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock holds a P/E ratio of 7.38, while its industry has an average P/E of 8.45. Over the past 52 weeks, PFSI's Forward P/E has been as high as 8.53 and as low as 6.56, with a median of 7.54.

Investors should also note that PFSI holds a PEG ratio of 0.74. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. PFSI's industry currently sports an average PEG of 1.01. PFSI's PEG has been as high as 0.85 and as low as 0.66, with a median of 0.75, all within the past year.

We should also highlight that PFSI has a P/B ratio of 1.40. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.15. PFSI's P/B has been as high as 1.41 and as low as 0.95, with a median of 1.07, over the past year.

Finally, investors should note that PFSI has a P/CF ratio of 3.38. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. PFSI's current P/CF looks attractive when compared to its industry's average P/CF of 11.24. PFSI's P/CF has been as high as 4.73 and as low as 2.96, with a median of 3.98, all within the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that PennyMac Financial is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, PFSI feels like a great value stock at the moment.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
PennyMac Financial Services, Inc. (PFSI) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.