Celebrations may be in order for Mr. Cooper Group Inc. (NASDAQ:COOP) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.
After this upgrade, Mr. Cooper Group's five analysts are now forecasting revenues of US$2.2b in 2020. This would be a reasonable 7.0% improvement in sales compared to the last 12 months. After this upgrade, the company is anticipated to report a loss of US$0.75 in 2020, a sharp decline from a profit over the last year. Yet before this consensus update, the analysts had been forecasting revenues of US$1.9b and losses of US$1.07 per share in 2020. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.
It will come as no surprise to learn that the analysts have increased their price target for Mr. Cooper Group 6.2% to US$14.33 on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Mr. Cooper Group, with the most bullish analyst valuing it at US$19.00 and the most bearish at US$11.00 per share. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Mr. Cooper Group's revenue growth will slow down substantially, with revenues next year expected to grow 7.0%, compared to a historical growth rate of 44% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 1.5% next year. So it's pretty clear that, while Mr. Cooper Group's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Mr. Cooper Group is moving incrementally towards profitability. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Mr. Cooper Group.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Mr. Cooper Group going out to 2021, and you can see them free on our platform here..
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.