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Mr. Cooper Group Inc. (NASDAQ:COOP) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.
Following the upgrade, the current consensus from Mr. Cooper Group's six analysts is for revenues of US$3.3b in 2021 which - if met - would reflect a huge 20% increase on its sales over the past 12 months. Per-share earnings are expected to leap 85% to US$6.10. Prior to this update, the analysts had been forecasting revenues of US$2.8b and earnings per share (EPS) of US$4.66 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
It will come as no surprise to learn that the analysts have increased their price target for Mr. Cooper Group 9.2% to US$37.14 on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Mr. Cooper Group, with the most bullish analyst valuing it at US$40.00 and the most bearish at US$32.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Mr. Cooper Group's revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 20% growth on an annualised basis. This is compared to a historical growth rate of 68% over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 5.7% annually. Factoring in the forecast slowdown in growth, it's pretty clear that Mr. Cooper Group is still expected to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Mr. Cooper Group.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Mr. Cooper Group analysts - going out to 2023, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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.
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