Should Value Investors Buy PennyMac Financial Services (PFSI) Stock?

The proven Zacks Rank system focuses on earnings estimates and estimate reviews to find winning stocks. Nonetheless, we know that our readers all have their own views, so we always review the latest trends in value, growth, and momentum to find solid picks.

Of these, no stock market trend is perhaps more popular than value investing, which is a strategy that has proven effective in all sorts of market environments. Value investors use proven metrics and fundamental analysis to find companies they believe are undervalued at their current stock price level.

In addition to the Zacks Ranking, investors looking for stocks with specific characteristics can use our Style Scores system. Of course, value investors will be more interested in the “Value” category of the system. Stocks with “A” ratings for value and high Zacks ranks are some of the best value stocks available at any time.

One company to watch right now is PennyMac Financial Services (PFSI). PFSI currently sports a Zacks rank of No. 2 (buy), along with a value rating of A. The stock has a forward P/E ratio of 6.66. This compares to its industry average Forward P/E of 7.68. Over the past 12 months, PFSI’s PER has been as high as 8.25 and as low as 3.47, with a median of 5.16.

Investors should also recognize that PFSI has a P/E ratio of 0.81. The P/B ratio is used to compare the market value of a stock with its book value, which is defined as total assets minus total liabilities. PFSI’s current P/B looks attractive compared to its industry average P/B of 1.31. Over the past 52 weeks, PFSI’s P/B has been as high as 1.22 and as low as 0.64, with a median of 0.86.

Finally, our model also highlights that PFSI has a P/CF ratio of 4.14. This figure highlights a company’s operating cash flow and can be used to find companies that are undervalued given their impressive cash flow prospects. This company’s current P/CF looks solid compared to its industry average P/CF of 6.16. Over the past 52 weeks, PFSI’s P/CF has been as high as 4.48 and as low as 2.72, with a median of 3.41.

Value investors will likely scrutinize more than these metrics, but the data above helps show that PennyMac Financial Services is likely undervalued right now. And considering the strength of its earnings outlook, PFSI stands out as one of the strongest value stocks in the market.

Zacks names ‘only one best choice for doubling up’

From thousands of stocks, 5 Zacks experts have each picked their favorite to skyrocket by +100% or more in the coming months. Of these 5, Research Director Sheraz Mian selects one to have the most explosive advantage of all.

It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could step in at any time.

This company could rival or surpass other recent Zacks stocks which are expected to double like Boston Beer Company which jumped +143.0% in just over 9 months and NVIDIA which jumped +175.9% in one year .

Free: Discover our best stock and our 4 finalists

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, click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Add Comment