It seems to be a wise idea to add Mr. Cooper Group Inc. (COOP - Free Report) stock to your portfolio now amid the coronavirus pandemic, given the strength in its fundamentals and solid prospects.
Further, analysts are bullish on the stock. Over the past 60 days, the Zacks Consensus Estimate for earnings moved 85.3% and 7.8% upward for 2020 and 2021, respectively. The company currently sports a Zacks Rank #1 (Strong Buy).
Shares of Mr. Cooper have appreciated 116% in the past 12 months, as against the industry's 24.2% decline.
Factors That Make Mr. Cooper a Solid Pick
Earnings Growth: Mr. Cooper’s earnings have witnessed a four year-CAGR of 150% (ended 2019). This momentum is likely to continue in the near term, as reflected by the projected earnings growth rate of 105.3% for 2020 (against the projection of a 14.9% decline for the industry).
Moreover, the company has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 54.2%.
Also, the company has a Growth Score of B. Our research shows that stocks with the combination of Growth Score of A or B, and a Zacks Rank #1 or Zacks Rank #2 (Buy), offer the best upside potential.
Revenue Strength: Mr. Cooper’s total revenues have witnessed a CAGR of 10.3% over the last three years (2017-2019). This uptick primarily resulted from the steady rise in service and origination revenues, and gain from mortgage loans held for sale. The company’s projected sales growth of 27.2% for 2020 (against the projection of no growth for the industry) and 10.9% for 2021 highlight its revenue strength.
Superior ROE: Mr. Cooper’s trailing 12-month return on equity (ROE) highlights its growth potential. The company’s ROE of 28.39% compares favorably with the industry’s 14.19%, underlining the fact that it is more efficient in using shareholder funds than its peers.
Stock Looks Undervalued: Mr. Cooper looks undervalued, with respect to price/earnings (P/E) (F1) and price/sales (P/S) ratios. It has a P/E (F1) ratio of 2.36, which is below the industry average of 11.21. Also, its P/S ratio of 0.79 is lower than the industry average of 1.03.
Additionally, the stock currently has a Value Score of A. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount.
Other Stocks to Consider
Cowen Inc. (COWN - Free Report) witnessed an upward estimate revision for 2020 earnings to $6.53 over the past 60 days. Its shares have appreciated 7.2% over the past year. At present, it sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Piper Sandler Companies (PIPR - Free Report) witnessed an upward earnings estimate revision of 22.4% for the current year over the past 60 days. Its shares have declined 1.8% over the past year. It currently flaunts a Zacks Rank of 1.
Elevate Credit, Inc. (ELVT - Free Report) has witnessed a 59.2% upward earnings estimate revision for the ongoing year in the past 60 days. Its shares have depreciated 47.6% over the past year. Currently, it sports a Zacks Rank of 1.
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