Head-To-Head Review: Home Point Capital (NASDAQ:HMPT) and PennyMac Financial Services (NYSE:PFSI)

Home Point Capital (NASDAQ:HMPT) and PennyMac Financial Services (NYSE:PFSI) are both construction companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, risk, profitability and valuation.

Valuation and Earnings

This table compares Home Point Capital and PennyMac Financial Services’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Home Point Capital $1.38 billion 0.66 $607.00 million $4.86 1.34
PennyMac Financial Services $3.71 billion 1.10 $1.65 billion $20.92 2.92

PennyMac Financial Services has higher revenue and earnings than Home Point Capital. Home Point Capital is trading at a lower price-to-earnings ratio than PennyMac Financial Services, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Home Point Capital and PennyMac Financial Services, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Home Point Capital 1 4 5 0 2.40
PennyMac Financial Services 0 2 6 0 2.75

Home Point Capital currently has a consensus target price of $12.30, indicating a potential upside of 88.65%. PennyMac Financial Services has a consensus target price of $80.57, indicating a potential upside of 31.93%. Given Home Point Capital’s higher possible upside, equities research analysts clearly believe Home Point Capital is more favorable than PennyMac Financial Services.

Institutional & Insider Ownership

95.7% of Home Point Capital shares are owned by institutional investors. Comparatively, 50.3% of PennyMac Financial Services shares are owned by institutional investors. 12.9% of PennyMac Financial Services shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Home Point Capital and PennyMac Financial Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Home Point Capital N/A N/A N/A
PennyMac Financial Services 43.72% 55.61% 5.86%

Summary

PennyMac Financial Services beats Home Point Capital on 11 of the 13 factors compared between the two stocks.

About Home Point Capital

Home Point Capital Inc., together with its subsidiaries, operates as a residential mortgage originator and service provider. It operates through two segments, Origination and Servicing. The Origination segment sources loans through direct, wholesale, and correspondent channels. The Servicing segment offers collecting loan payments; remitting principal and interest payments to investors; managing escrow funds for the payment of mortgage-related expenses, such as taxes and insurance; and performing loss mitigation activities on behalf of investors and administering mortgage loans. The company was incorporated in 2014 and headquartered in Ann Arbor, Michigan.

About PennyMac Financial Services

PennyMac Financial Services, Inc., through its subsidiaries, engages in the mortgage banking and investment management activities in the United States. It operates through three segments: Production, Servicing, and Investment Management. The Production segment is involved in the origination, acquisition, and sale of loans. It sources first-lien residential conventional and government-insured or guaranteed mortgage loans. The Servicing segment engages in the servicing of newly originated loans, and execution and management of early buyout transactions and servicing of loans. It performs loan administration, collection, and default management activities, including the collection and remittance of loan payments; response to customer inquiries; accounting for principal and interest; holding custodial funds for the payment of property taxes and insurance premiums; counseling delinquent borrowers; and supervising foreclosures and property dispositions. The Investment Management segment is involved in sourcing, performing diligence, bidding, and closing investment asset acquisitions; managing correspondent production activities for PennyMac Mortgage Investment Trust; and managing acquired assets. The company was founded in 2008 and is headquartered in Westlake Village, California.

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