PennyMac Financial Services, Inc. (NYSE:PFSI) Analysts Just Slashed This Year's Estimates
Market forces rained on the parade of PennyMac Financial Services, Inc. (NYSE:PFSI) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
Following the latest downgrade, the current consensus, from the four analysts covering PennyMac Financial Services, is for revenues of US$1.4b in 2023, which would reflect a chunky 17% reduction in PennyMac Financial Services' sales over the past 12 months. Statutory earnings per share are anticipated to dip 4.9% to US$4.99 in the same period. Previously, the analysts had been modelling revenues of US$1.6b and earnings per share (EPS) of US$5.66 in 2023. The forecasts seem less optimistic after the new consensus numbers, with lower sales estimates and making a real cut to earnings per share forecasts.
See our latest analysis for PennyMac Financial Services
The average price target climbed 6.8% to US$85.00 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on PennyMac Financial Services, with the most bullish analyst valuing it at US$90.00 and the most bearish at US$72.00 per share. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the PennyMac Financial Services' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 30% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 6.2% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.5% per year. It's pretty clear that PennyMac Financial Services' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for PennyMac Financial Services. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of PennyMac Financial Services.
As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with PennyMac Financial Services' financials, such as recent substantial insider selling. Learn more, and discover the 2 other warning signs we've identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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