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PennyMac Mortgage Trust (PMT) T delivered a mixed Q1 2025. Not great, not terrible, but a bit uneven depending on where you look.

Book value slightly underperformed expectations, declining a bit more than projected. The dip wasn’t alarming, and it was still within our expected range, but it did reflect modest underperformance across several sub-portfolios - particularly MBS, MSR, and hedging.

On the bright side, PMT’s net interest spread improved and outperformed expectations by about $0.02 per share. Lower net spread expenses helped here. The company continues to benefit from its MSR portfolio as a buffer in a higher-rate environment.

However, guidance was trimmed slightly. Adjusted diluted EPS was revised down by $0.02, mostly due to a more cautious outlook on MSR returns. It’s not enough to downgrade the stock, but it does lower near-term upside.

PMT’s origination volumes declined 18% quarter-over-quarter. That’s a bigger drop than we expected due to both seasonality and the late-2024 rate spike. Credit risk remains stable, and MSR performance was close to projections - just a bit weaker on the valuation side.

PMT doesn’t publish a core earnings metric, but spread performance suggests things are heading in the right direction.

Our price target is $13.00 and a risk/performance rating of 3.5.

For those interested, we also have or will have reports on (NLY), (AGNC), (DX), (TWO), (ARR), and many others.

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This article was compiled by my assistant. If there are any mistakes, blame him - I certainly will.