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Strength Seen in Altisource Portfolio (ASPS): Can Its 18.3% Jump Turn into More Strength?

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Altisource Portfolio Solutions (ASPS) shares soared 18.3% in the last trading session to close at $11.75. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 12.4% loss over the past four weeks.

The increased investor optimism can be attributed to news of the sale of Altisource Portfolio’s majority-owned subsidiary — Pointillist, Inc. — which is expected to close before 2021 end. Altisource Portfolio owns around 69% of the equity stake in Pointillist and estimates receiving $100 million in cash at the sale closing and an additional $3.7 million in cash after a year of closing, assuming no indemnification claims. The company expects to recognize a gain of $107 million from the sale. Efforts to monetizing attractive assets and strengthen the balance sheet by adding $100 million have likely sparked investor interest in the stock.

This real estate services firm is expected to post quarterly loss of $0.46 per share in its upcoming report, which represents a year-over-year change of -91.7%. Revenues are expected to be $50.13 million, down 41.3% 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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