Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK ( TheStreet) -- PennyMac Mortgage Investment (NYSE: PMT) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, solid stock price performance, growth in earnings per share and compelling growth in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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- PMT's very impressive revenue growth greatly exceeded the industry average of 15.8%. Since the same quarter one year prior, revenues leaped by 136.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 47.85% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, PMT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- PENNYMAC MORTGAGE INVEST TR has improved earnings per share by 10.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PENNYMAC MORTGAGE INVEST TR increased its bottom line by earning $2.37 versus $1.43 in the prior year. This year, the market expects an improvement in earnings ($3.11 versus $2.37).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 96.7% when compared to the same quarter one year prior, rising from $20.53 million to $40.38 million.
-- Written by a member of TheStreet Ratings Staff