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MR. COOPER GROUP INC (COOP) Hits Fresh High: Is There Still Room to Run?

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Have you been paying attention to shares of Mr Cooper (COOP - Free Report) ? Shares have been on the move with the stock up 14.4% over the past month. The stock hit a new 52-week high of $64.87 in the previous session. Mr Cooper has gained 59.5% since the start of the year compared to the 12.3% move for the Zacks Finance sector and the 22.8% return for the Zacks Financial - Consumer Loans industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 25, 2023, Mr Cooper reported EPS of $2.79 versus consensus estimate of $1.73 while it beat the consensus revenue estimate by 34.1%.

For the current fiscal year, Mr Cooper is expected to post earnings of $7.31 per share on $1.8 billion in revenues. This represents a 217.83% change in EPS on a -27.04% change in revenues. For the next fiscal year, the company is expected to earn $8.43 per share on $1.98 billion in revenues. This represents a year-over-year change of 15.32% and 10.3%, respectively.

Valuation Metrics

Mr Cooper may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

Mr Cooper has a Value Score of A. The stock's Growth and Momentum Scores are B and F, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 8.8X current fiscal year EPS estimates, which is not in-line with the peer industry average of 8.9X. On a trailing cash flow basis, the stock currently trades at 19.9X versus its peer group's average of 5.3X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Mr Cooper currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Mr Cooper passes the test. Thus, it seems as though Mr Cooper shares could still be poised for more gains ahead.

How Does COOP Stack Up to the Competition?

Shares of COOP have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Capital One Financial Corporation (COF - Free Report) . COF has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of D, and a Momentum Score of B.

Earnings were strong last quarter. Capital One Financial Corporation beat our consensus estimate by 36.09%, and for the current fiscal year, COF is expected to post earnings of $13.75 per share on revenue of $36.73 billion.

Shares of Capital One Financial Corporation have gained 12.9% over the past month, and currently trade at a forward P/E of 9.28X and a P/CF of 4.43X.

The Financial - Consumer Loans industry may rank in the bottom 84% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for COOP and COF, even beyond their own solid fundamental situation.


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