With an impressive year-to-date return of 97.6%, shares of
Lender Processing Services, Inc.
) are currently hovering near its 52-week high of $30.88. This
Zacks #1 Rank (Strong Buy) business services provider announced a
strong second quarter in early August, and will report again later
this month. As it continues with the growth trajectory through a
diligent execution of its operating strategy, Lender Processing
Services looks to be a solid momentum pick.
Strong Second Quarter
On August 2, Lender Processing Services reported solid second
quarter results with a 35.7% year-over-year spike in adjusted net
income to 76 cents per share. The result also topped the Zacks
Consensus Estimate of 60 cents by 26.7%.
Total revenues increased 6.7% year over year to $533.2 million. The
adjusted EBITDA margin (earnings before interest, tax,
depreciation, and amortization) surged 464 basis points to 27.3%,
due to strong performances across all segments. Adjusted free cash
flow increased 40.5% year over year to $114.9 million as a result
of higher net earnings.
Lender Processing Services is scheduled to report again on October
29. Adjusted net earnings are expected between 68 cents and 72
cents per share. The current Zacks Consensus Estimate for the third
quarter is at 71 cents, a full 10 cents better than three months
Surge in Earnings Momentum
Over the past 90 days, the Zacks Consensus Estimate for 2012
increased 13.6% to $2.75, suggesting year-over-year growth of 2.5%.
The Zacks Consensus Estimate for 2013 advanced 4.5% to $2.78 over
the same period, representing growth of 1.3%.
The valuation for Lender Processing Services looks fairly
attractive on a price-to-earnings (P/E) and price-to-sales (P/S)
basis. Shares are trading at a forward P/E of 11.14x, a 29.8%
discount to the peer group average of 15.87x. On a P/S basis, the
stock is currently trading at 1.23x, versus the peer group average
of 1.84x. Its PEG ratio is 1.01 based on a 5-year earnings growth
rate of 11.0%.
Chart Shows Growth Potential
Since February 6, 2012, shares of Lender Processing Services have
consistently fared better than the simple moving average for 200
days or SMA (200). The continuous uptrend in stock prices, as
mirrored in the following chart, offers an enticing upside
potential going forward. Volume is fairly strong, averaging 610K
daily. The year-to-date return for the stock is noteworthy at 97.6%
compared to the S&P 500 tally of 13.9%.
Lender Processing Services offers a variety of integrated
technology and outsourced services to the mortgage lending industry
in the U.S. Its product portfolio includes mortgage and consumer
loan processing services, mortgage settlement services, default
solutions and loan performance analytics, as well as end-to-end
technology and data support solutions for the real estate industry,
capital markets investors and government offices. The company
currently has a market cap of $2.59 billion.
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