PennyMac (PFSI) Surges 7%: Is This an Indication of Further Gains?

PennyMac Financial (PFSI) shares ended the last trading session 7% higher at $61.61. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 10.2% loss over the past four weeks.

Optimism surrounding the growing demand for mortgage originations as well as refinancing activities and persistent fall in number of mortgages in active forbearance over the past week drove the shares of PennyMac higher. This can be attributed to historically low rates, which continue to benefit the mortgage servicing industry.

Price and Consensus

This mortgage banking and investment management company is expected to post quarterly earnings of $5.22 per share in its upcoming report, which represents a year-over-year change of +40%. Revenues are expected to be $991.74 million, up 37.4% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For PennyMac, the consensus EPS estimate for the quarter has been revised 18.2% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on PFSI going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 1 (Strong Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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PennyMac Financial Services, Inc. (PFSI) : Free Stock Analysis Report

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