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Ocwen Financial (OCN) Up 1.8% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Ocwen Financial Corporation OCN. Shareshave added about 1.8% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is OCN due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Ocwen’s Q1 Earnings Beat Estimates, Costs Decline

Ocwen Financial’s first-quarter 2018 earnings were 2 cents per share while the Zacks Consensus Estimate was a loss of 33 cents. Also, the figure reflected improvement from the prior-year quarter’s loss of 26 cents.

Results primarily benefited from a decrease in expenses, which resulted from the company’s efforts to sell Mortgage Servicing Rights and trim operations to focus on the core business. Also, its liquidity position remained strong. However, lower revenues acted as a headwind.

Net income attributable to shareholders was $2.5 million, which reflected an improvement from the prior-year quarter’s net loss of $32.7 million.

Revenues and Expenses Decrease

Total revenues for the reported quarter were $260.3 million, down 19.1% year over year. The decline was due to a fall in all components of revenues.

Total expenses declined 25.3% from the prior-year quarter to $206.5 million. The decline was due to a fall in all expense components.

Also, net other expenses amounted to $48.8 million, down from $76 million recorded in the prior-year quarter.

As of Mar 31, 2018, Ocwen had a cash balance of $285.7 million, up from $259.7 million as of Dec 31, 2017. Total assets were $8.5 billion as of the same date, slightly up from $8.4 billion as of Dec 31, 2017.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter. Last month, the consensus estimate has shifted by 40.9% due to these changes.

Ocwen Financial Corporation Price and Consensus

 

Ocwen Financial Corporation Price and Consensus | Ocwen Financial Corporation Quote

VGM Scores

At this time, OCN has an average Growth Score of C, however its momentum is doing a bit better with a B. Following the exact same course, the stock was also allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is equally suitable for value and momentum investors than growth investors.

Estimates have been trending upward for the stock and the magnitude of this revision looks promising. It comes with little surprise OCN has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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