Ocwen To Gain From Strategic Initiatives Despite High Costs

On Jun 6, we issued an updated research report on Ocwen Financial Corporation (NYSE:OCN) .The company reported a loss in the previous quarter, which was significantly lower on a year-over-year basis. Ocwen Financial’s efforts to improve performance by restructuring its service portfolio and diversifying sources of revenues will be beneficial to its top line. However, mounting expenses remain a headwind.

Ocwen Financial’s loss estimates for the current quarter and current year have declined by 8.0% and 2.4%, respectively, in the last 30 days. As a result, the stock carries a Zacks Rank #2 (Buy).

The company has witnessed a compound annual growth rate of 13.2% in the last five years (ended 2016) on the back of strategic acquisitions and mortgage-servicing rights (MSRs). Further, its Automotive Capital Services initiative will expand the revenue sources.

Following various investigations on Ocwen Financial’s capability to service MSRs, several steps have been undertaken by the company to restructure its service portfolio. Further, the proceeds from divesture of these rights were used efficiently to reduce the company’s debt burden. In fact, it is planning to dump MSRs worth about $117 billion in the near-term.

Nevertheless, the company continues to face higher legal and monitoring expenses.

Ocwen Financial’s shares have gained 26.6% over the last one year, underperforming the Zacks categorized Financial - Mortgage & Related Services industry’s rally of 41.0%.

Some other stocks in the finance space worth considering include M&T Bank Corporation (NYSE:MTB) , Northern Trust Corporation (NASDAQ:NTRS) and The PNC Financial Services Group, Inc. (NYSE:PNC) . All these stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

M&T Bank witnessed an upward earnings estimate revision of 4.9%, over the past 60 days. Also, its share price gained 33.6% over the last one year.

Northern Trust's earnings estimates moved upward by 2.3% over the past 60 days, for the current year. Its share price increased 22.8%, over the last one year.

PNC Financial’s current-year earnings estimates were revised 2.6% upward, over the past 60 days. Over the last one year, its share price surged 35.0%.

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