PennyMac Mortgage Investment Trust (PMT)

Mortgage REIT PennyMac Mortgage Investment Trust (NYSE:PMT) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 22.7% year on year to $99.23 million. Its GAAP profit of $0.55 per share was 48.7% above analysts’ consensus estimates.

Company Overview

Operating as a real estate investment trust since 2009 to maintain tax advantages, PennyMac Mortgage Investment Trust (NYSE:PMT) is a specialty finance company that invests in mortgage-related assets and operates a correspondent lending business.

Thrifts & Mortgage Finance institutions operate by accepting deposits and extending loans primarily for residential mortgages, earning revenue through interest rate spreads (difference between lending rates and borrowing costs) and origination fees. The industry benefits from demographic tailwinds as millennials enter prime homebuying age, technological advancements streamlining the loan approval process, and potential interest rate stabilization improving affordability. However, significant headwinds include net interest margin compression during rate volatility, increased competition from fintech disruptors offering digital-first experiences, mounting regulatory compliance costs, and potential housing market corrections that could impact loan portfolios and default rates.

PMT competes with other mortgage REITs including Chimera Investment Corporation (NYSE:CIM), Invesco Mortgage Capital (NYSE:IVR), Rithm Capital (NYSE:RITM), MFA Financial (NYSE:MFA), New York Mortgage Trust (NASDAQ:NYMT), Redwood Trust (NYSE:RWT), and Two Harbors Investment (NYSE:TWO).

In general, banks make money from two primary sources. The first is net interest income, which is interest earned on loans, mortgages, and investments in securities minus interest paid out on deposits. The second source is non-interest income, which can come from bank account, credit card, wealth management, investing banking, and trading fees. Over the last five years, PennyMac Mortgage Investment Trust’s demand was weak and its revenue declined by 21.6% per year. This was below our standards and is a sign of lacking business quality.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. PennyMac Mortgage Investment Trust’s annualized revenue declines of 9.6% over the last two years suggest its demand continued shrinking. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, PennyMac Mortgage Investment Trust reported robust year-on-year revenue growth of 22.7%, and its $99.23 million of revenue topped Wall Street estimates by 2.1%.

Net interest income made up -1.2% of the company’s total revenue during the last five years, meaning PennyMac Mortgage Investment Trust is well diversified and has a variety of income streams driving its overall growth. Nevertheless, net interest income is critical to analyze for banks because they’re considered a higher-quality, more recurring revenue source by investors.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

PennyMac Mortgage Investment Trust’s EPS grew at an astounding 146% compounded annual growth rate over the last five years, higher than its 21.6% annualized revenue declines. However, this alone doesn’t tell us much about its business quality because its efficiency ratio didn’t improve.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For PennyMac Mortgage Investment Trust, its two-year annual EPS declines of 9% mark a reversal from its (seemingly) healthy five-year trend. We hope PennyMac Mortgage Investment Trust can return to earnings growth in the future.

In Q3, PennyMac Mortgage Investment Trust reported EPS of $0.55, up from $0.36 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects PennyMac Mortgage Investment Trust’s full-year EPS of $0.91 to grow 69.2%.

Banks profit by intermediating between depositors and borrowers, making them fundamentally balance sheet-driven enterprises. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these institutions.

Because of this, tangible book value per share (TBVPS) emerges as the critical performance benchmark. By excluding intangible assets with uncertain liquidation values, this metric captures real, liquid net worth per share. On the other hand, EPS is often distorted by mergers and flexible loan loss accounting. TBVPS provides clearer performance insights.

PennyMac Mortgage Investment Trust’s TBVPS declined at a 5.4% annual clip over the last five years. On a two-year basis, TBVPS fell at a slower pace, dropping by 3.3% annually from $16.22 to $15.16 per share.

Over the next 12 months, Consensus estimates call for PennyMac Mortgage Investment Trust’s TBVPS to shrink by 1.4% to $14.95, a sour projection.

Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.

Over the last five years, PennyMac Mortgage Investment Trust has averaged an ROE of 5.1%, uninspiring for a company operating in a sector where the average shakes out around 7.5%.

It was good to see PennyMac Mortgage Investment Trust beat analysts’ EPS expectations this quarter. We were also excited its net interest income outperformed Wall Street’s estimates by a wide margin. On the other hand, its tangible book value per share missed. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 3.9% to $12.15 immediately following the results.

Updated: December 4, 2025 at 11:46 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own PennyMac Mortgage Investment Trust, you should also grasp the company’s longer-term business quality and valuation.

PennyMac Mortgage Investment Trust doesn’t pass our quality test. To begin with, its revenue has declined over the last five years. And while its net interest income growth was exceptional over the last five years, the downside is its estimated sales for the next 12 months are weak. On top of that, its TBVPS has declined over the last five years.

PennyMac Mortgage Investment Trust’s P/B ratio based on the next 12 months is 0.8x. While this valuation is reasonable, we don’t see a big opportunity at the moment. There are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $13.57 on the company (compared to the current share price of $12.73).