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Can PennyMac (PFSI) Maintain Its Earnings Beat Streak in Q2?

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PennyMac Financial Services, Inc. (PFSI - Free Report) is scheduled to report second-quarter 2020 results on Aug 6, after the opening bell. The company’s revenues and earnings are projected to reflect year-over-year increases.

In the last reported quarter, its earnings surpassed the Zacks Consensus Estimate. Results reflected growth in revenues and higher expenses.

The company has an impressive earnings surprise history. Its earnings surpassed estimates in each of the trailing four quarters, the average beat being 19.99%.

Let’s see how things have shaped up for this announcement.

The company does not have the right combination of the two key ingredients for a possible earnings beat — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold).

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for the stock is currently -1.32%.

Zacks Rank: PennyMac currently sports a Zacks Rank of 1, which increases the predictive power of ESP. But we also need to have a positive ESP to be confident of an earnings beat.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Further, the company’s activities in the second quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate of $3.04 for earnings has been unchanged over the past 30 days. The figure indicates a year-over-year surge of a whopping 230.4%.

Key Factors

PennyMac’s top line is expected to have benefited from an increase in mortgage loan originations and refinancing activities in the second quarter on lower mortgage rates.

However, the company’s other investment portfolio’s interest income might have been affected due to relatively lower interest rates. The Zacks Consensus Estimate for quarterly sales of $677 million reflects a 123.4% surge from the year-ago reported figure.

Moreover, as salaries and benefits costs continue to rise, overall expenses are expected to have flared up in the quarter under discussion. Also, the company’s efforts to expand into new markets and products might have inflated expenses.

Stocks to Consider

LendingTree’s (TREE - Free Report) shares have rallied 7.4% in six months’ time. Also, the company’s earnings estimates for the current year have been revised upward over the past 30 days. It carries a Zacks Rank of 2 at present.

Orchid Island Capital’s (ORC - Free Report) share price has decreased 18.9% over the past six months. Further, the company’s earnings estimates for the ongoing year have been unchanged in the past 30 days. It currently carries a Zacks Rank of 2.

TPG Specialty Lending’s (TSLX - Free Report) shares have declined 20% over the past six months. This Zacks Rank #2 company’s earnings estimates for the current year have moved up in 30 days’ time.

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