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New Residential Investment (NRZ) Moves 8.7% Higher: Will This Strength Last?

Zacks Equity Research
·2 min read

New Residential Investment NRZ shares rallied 8.7% in the last trading session to close at $9.40. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 19.8% loss over the past four weeks.

New Residential witnessed a rise in the share price for the second consecutive day. The company’s announcement of internalization of its management function is likely driving the bullish investor sentiments. With this, NRZ has stopped to be externally managed. It now operates as an internally managed REIT. The move is projected to result in $60-$65 million of cost savings and 12-13 cents per diluted share annually. This might alleviate the bottom-line pressure.

This real estate investment trust is expected to post quarterly earnings of $0.25 per share in its upcoming report, which represents a year-over-year change of -19.4%. Revenues are expected to be $252.3 million, up 71.5% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

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For New Residential Investment, the consensus EPS estimate for the quarter has been revised 27.5% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on NRZ going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

New Residential Investment is part of the Zacks REIT and Equity Trust industry. Armour Residential REIT (ARR), another stock in the same industry, closed the last trading session 3.5% higher at $6.16. ARR has returned -20.1% in the past month.

For Armour Residential REIT , the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.25. This represents a change of +19.1% from what the company reported a year ago. Armour Residential REIT currently has a Zacks Rank of #1 (Strong Buy).


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Zacks Investment Research