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Strength Seen in Altisource Portfolio (ASPS): Can Its 19.7% Jump Turn into More Strength?

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Altisource Portfolio Solutions (ASPS) shares soared 19.7% in the last trading session to close at $7.77. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 6.2% loss over the past four weeks.

The increased investor optimism can be attributed to Altisource Portfolio’s recent credit agreement for a three-year revolving line of credit with STS Mater Fund, Ltd., which provides the former with the ability to borrow up to $20 million through Jun 22, 2022, up to $15 million through Jun 22, 2023, and up to $10 million until the end of the term. With this, the company has arranged funds to boost its liquidity, which is being temporarily affected by the pandemic.

Also, management remains hopeful about the recovery in its default-related business at the end of the ongoing year, while it continues to advance with its origination business. The upbeat outlook by management is expected to have also been driving the rally.

This real estate services firm is expected to post quarterly loss of $0.50 per share in its upcoming report, which represents a year-over-year change of +34.2%. Revenues are expected to be $51.08 million, down 43.9% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Altisource Portfolio, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on ASPS going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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