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Ocwen (OCN) Stock Up 5.1% on Q1 Earnings Beat, Costs Down

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Shares of Ocwen Financial Corporation OCN gained nearly 5.1% following the release of first-quarter 2018 results. 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 (MSR) 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.

Our Take

Ocwen’s initiatives to focus on core operations, efforts to restructure servicing portfolio and a strong balance sheet will support profitability. Further, lower operating expenses will likely aid the company’s financials in the quarters ahead. In fact, it recently entered an agreement to buy PHH Corporation, which is expected to further reduce costs. However, muted revenue growth is expected to hurt the company in the near term. The adverse impact of various regulatory probes into Ocwen’s financials remains a major concern.

Ocwen Financial Corporation Price, Consensus and EPS Surprise
 

Ocwen Financial Corporation Price, Consensus and EPS Surprise | Ocwen Financial Corporation Quote

Currently, Ocwen carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among the stocks in the same space, LendingTree, Inc.’s TREE first-quarter 2018 earnings per share of $1.10 lagged the Zacks Consensus Estimate of $1.17.

Walker & Dunlop, Inc. WD reported earnings of $1.16 per share, which outpaced the Zacks Consensus Estimate of 96 cents.

Essent Group Ltd. ESNT is slated to report its quarterly numbers on May 4.

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