Zack’s Bear of the Day: Ocwen Financial
Ocwen Financial Corp (NYSE:OCN) is now a Zacks Rank #5 (Strong Sell) and it has this rank not because of speculation about it not being allowed to operate in the state of California, but rather is a #5 due to estimates that continue to fall.
Ocwen Financial Corporation is engaged in the servicing and origination of mortgage loans in the United States and internationally. The company was founded in 1988 and is headquartered in Atlanta, Georgia.
A Few Recent Misses
OCN has put together a string of three misses in a row, and that will hurt any stock. The problem has really been that the losses and misses have not started really showing up in the top line as well.
The last three quarters revenues were $551M, $553M and $514M. More importantly, two of the three quarters saw the topline come in below expectations. The December quarter is expected to see $501M in revenue, so the trend is clearly moving lower.
Estimates have fallen dramatically over the past year. The 2014 Zacks Consensus Estimate has dropped from $5.00 in February of last year to $2.57 in August and is not at $0.85. That is nothing short of a stunning fall from grace.
The 2015 Zacks Consensus Estimate has also fallen from $5.70 in March of last year to $3.44 in August and is not at $1.92. Despite the huge decrease, there is still some implied earnings growth expected for OCN.
The price and consensus chart for OCN shows how a stock that is seeing earnings estimate decreases is primed for selling. The stock reached highs in the 50’s a year ago, but has decreased in price by nearly 85% over the last year. Estimates have dropped and the stock is now a Zacks Rank #5 (Strong Sell).
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