PennyMac Mortgage Investment Trust (PMT) just delivered a quarter that turned heads, with revenue up about 23% year on year and earnings and net interest income coming in ahead of Wall Street estimates.

See our latest analysis for PennyMac Mortgage Investment Trust.

That upbeat quarter seems to be nudging sentiment in the right direction, with the latest share price at $12.70 and a 30 day share price return of 4.44% building on a three year total shareholder return of 24.45%. This suggests momentum is gradually improving.

If this kind of turnaround story has your attention, it could be a good moment to broaden your search and explore fast growing stocks with high insider ownership.

With the share price still trading at a modest discount to analyst targets despite a standout quarter, the big question now is whether PennyMac Mortgage Investment Trust remains undervalued or if the market is already pricing in future growth.

With the narrative fair value at $13.43 versus the latest $12.70 close, the story hinges on how PMT can grow earnings despite shrinking revenue.

Ongoing digital transformation and the ability to organically create securitizations through technology enabled processes are enabling PMT to efficiently structure and retain higher yielding credit sensitive non agency MBS and CRT assets, which could drive net margin expansion as operational efficiencies scale.

Read the complete narrative.

Want to see what powers that margin expansion story? The narrative leans on falling revenues, rising profitability, and a future earnings multiple below today’s sector norm. Curious which assumptions really move the fair value dial?

Result: Fair Value of $13.43 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, persistent interest rate volatility and reliance on non agency securitizations could pressure book value, net interest income, and ultimately investor confidence.

Find out about the key risks to this PennyMac Mortgage Investment Trust narrative.

While the narrative points to a 5.4% upside, today’s 13.9x earnings multiple already sits above the Mortgage REITs industry at 13.1x and just below a fair ratio of 14.7x. That leaves only a thin margin for error if earnings or book value disappoint.

See what the numbers say about this price — find out in our valuation breakdown.

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