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Should Value Investors Buy PennyMac Financial (PFSI) Stock?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is PennyMac Financial (PFSI - Free Report) . PFSI is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock holds a P/E ratio of 7.76, while its industry has an average P/E of 8.19. Over the last 12 months, PFSI's Forward P/E has been as high as 8.53 and as low as 6.56, with a median of 7.57.

Investors should also note that PFSI holds a PEG ratio of 0.78. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. PFSI's PEG compares to its industry's average PEG of 0.98. Over the last 12 months, PFSI's PEG has been as high as 0.85 and as low as 0.66, with a median of 0.76.

Investors should also recognize that PFSI has a P/B ratio of 1.41. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. PFSI's current P/B looks attractive when compared to its industry's average P/B of 2.21. Over the past year, PFSI's P/B has been as high as 1.46 and as low as 0.25, with a median of 1.03.

Finally, investors will want to recognize that PFSI has a P/CF ratio of 4.24. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. PFSI's P/CF compares to its industry's average P/CF of 13.32. PFSI's P/CF has been as high as 5.70 and as low as 3.01, with a median of 4.17, all within the past year.

These are just a handful of the figures considered in PennyMac Financial's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that PFSI is an impressive value stock right now.


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