Yahoo Finance Announcing: PennyMac Financial Services (NYSE:PFSI) Stock Soared An Exciting 324% In The Last Five Years
Buying shares in the best businesses can build meaningful wealth for you and your family. While not every stock performs well, when investors win, they can win big. Just think about the savvy investors who held PennyMac Financial Services, Inc. (NYSE:PFSI) shares for the last five years, while they gained 324%. This just goes to show the value creation that some businesses can achieve. It's down 2.4% in the last seven days.
View our latest analysis for PennyMac Financial Services
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During five years of share price growth, PennyMac Financial Services achieved compound earnings per share (EPS) growth of 64% per year. The EPS growth is more impressive than the yearly share price gain of 34% over the same period. Therefore, it seems the market has become relatively pessimistic about the company. The reasonably low P/E ratio of 2.46 also suggests market apprehension.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We know that PennyMac Financial Services has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at PennyMac Financial Services' financial health with this free report on its balance sheet.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, PennyMac Financial Services' TSR for the last 5 years was 341%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
It's nice to see that PennyMac Financial Services shareholders have received a total shareholder return of 101% over the last year. Of course, that includes the dividend. That gain is better than the annual TSR over five years, which is 35%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand PennyMac Financial Services better, we need to consider many other factors. Take risks, for example - PennyMac Financial Services has 4 warning signs (and 2 which shouldn't be ignored) we think you should know about.
Of course PennyMac Financial Services may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
