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Velocity Financial (VEL) Soars 10.2%: Is Further Upside Left in the Stock?

Velocity Financial (VEL) shares soared 10.2% in the last trading session to close at $12.50. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 26.4% gain over the past four weeks.

Last week, the average long-term U.S. mortgage rate dipped for the third time in many weeks. This, along with a rebound in single-family housing and a possible pause in interest rate hikes by Federal Reserve, indicates an improving market outlook for Velocity Financial.  This, thus, led to bullish investor sentiments, which drove the VEL stock.

This company is expected to post quarterly earnings of $0.34 per share in its upcoming report, which represents a year-over-year change of +9.7%. Revenues are expected to be $26.3 million, down 0% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Velocity Financial, the consensus EPS estimate for the quarter has been revised 13.3% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on VEL going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Velocity Financial is part of the Zacks Financial - Mortgage & Related Services industry. Ocwen Financial (OCN), another stock in the same industry, closed the last trading session 8.9% lower at $28.72. OCN has returned 20.1% in the past month.

Ocwen's consensus EPS estimate for the upcoming report has changed -254.6% over the past month to -$0.17. Compared to the company's year-ago EPS, this represents a change of +65.3%. Ocwen currently boasts a Zacks Rank of #3 (Hold).

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