PMT
PennyMac Mortgage Investment Trust
$9.32
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 71.2% below fair value
You pay
$9.32
Bear
$26.69
Fair
$32.41
Bull
$38.13
Bear
$26.69
+186.4%
$1.47 FFO × 18x
Fair
$32.41
+247.7%
$1.47 FFO × 22x
Bull
$38.13
+309.1%
$1.47 FFO × 26x
Adjust Assumptions
22.1x
$
Key Value Driver
FFO/share ($1.47) × default P/FFO multiple
Implied Market Multiple
6.4x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (26 analysts)
$10.50
Divergence from AlphaVal
209%
Summary
At $1.47 FFO/share with a 22x default REIT multiple, the base-case value is $32.41 per share. Dividend yield: 17.2%. DDM cross-check: $29.82.
Warnings
Standard profit figures are misleading for real estate companies — large non-cash accounting charges make profits look artificially low. Dividend yield and funds from operations are better measures.
Dividend yield of 17.2% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $10.50 (from 26 analysts). Our estimate is 209% above the consensus -- consider that gap carefully.
Key Risks
- P/E and EV/EBITDA are structurally wrong for REITs — use P/FFO and NAV
- Interest rate sensitivity: REIT multiples compress when rates rise
- FFO approximation (NI + D&A) may include gains on property sales — verify