Since August 2025, PennyMac Mortgage Investment Trust has been in a holding pattern, posting a small return of 1.5% while floating around $12.44.

Is there a buying opportunity in PennyMac Mortgage Investment Trust, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.

Why Do We Think PennyMac Mortgage Investment Trust Will Underperform?

We're sitting this one out for now. Here are three reasons we avoid PMT and a stock we'd rather own.

1. Revenue Spiraling Downwards

Net interest income and and fee-based revenue are the two pillars supporting bank earnings. The former captures profit from the gap between lending rates and deposit costs, while the latter encompasses charges for banking services, credit products, wealth management, and trading activities.

PennyMac Mortgage Investment Trust struggled to consistently generate demand over the last five years as its revenue dropped at a 23.1% annual rate. This wasn’t a great result and signals it’s a low quality business.

2. EPS Took a Dip Over the Last Two Years

While long-term earnings trends give us the big picture, we also track EPS over a shorter period because it can provide insight into an emerging theme or development for the business.

Sadly for PennyMac Mortgage Investment Trust, its EPS declined by more than its revenue over the last two years, dropping 22%. This tells us the company struggled to adjust to shrinking demand.

3. Declining TBVPS Reflects Erosion of Asset Value

For banks, tangible book value per share (TBVPS) is a crucial metric that measures the actual value of shareholders’ equity, stripping out goodwill and other intangible assets that may not be recoverable in a worst-case scenario.

Disappointingly for investors, PennyMac Mortgage Investment Trust’s TBVPS declined at a 2.7% annual clip over the last two years.

Final Judgment

We cheer for all companies supporting the economy, but in the case of PennyMac Mortgage Investment Trust, we’ll be cheering from the sidelines. That said, the stock currently trades at 0.8× forward P/B (or $12.44 per share). While this valuation is reasonable, we don’t see a big opportunity at the moment. There are more exciting stocks to buy at the moment. We’d suggest looking at one of Charlie Munger’s all-time favorite businesses.

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