Positive earnings estimate revisions heading into the third
quarter earnings release helped
) hit a new 52-week high and achieve a Zacks #1 Rank (Strong Buy)
on October 9. With a solid year-to-date return of 95.3% and an
expected long-term earnings growth rate of 6%, this provider of
business process management services offers an attractive
Q3 Release Coming Up
PHH Corporation is expected to release its third quarter earnings
on October 29. The Zacks Consensus Estimates are for earnings of 66
cents per share on revenue of $702.0 million. The company has
surpassed profit expectations in two out of the last four quarters.
On August 7, PHH Corporation reported second quarter 2012 earnings
of 49 cents per share, which fell short of the Zacks Consensus
Estimate and last year's result. Escalated total expenses were
partially offset by higher net revenues recorded.
Net revenues increased 8.3% year over year to $559.0 million.
Mortgage fees climbed to $83.0 million from $56.0 million in the
year-ago quarter. However, fleet lease income contracted marginally
to $338.0 million. Additionally, the company's total expenses
jumped 9.8% to $639.0 million over the same period.
Earnings Momentum on the Rise
The Zacks Consensus Estimate for 2012 advanced 2.9% to $2.80 per
share over the last 60 days. For 2013, the Zacks Consensus Estimate
climbed 10.3% to $2.35 per share.
Valuation Looks Attractive
PHH Corporation currently trades at 7.9x 12-month forward earnings,
a 13% discount to the peer group average of 9.1x. Its price to book
ratio of 0.8 is at a 47% discount to the peer group average of 1.5.
The company has a trailing 12-month ROE of 13.3%, compared with the
peer group average of 10.9%. This implies that the company
reinvests its earnings more efficiently than its peer group.
Chart Shows Strength
PHH Corporation has witnessed strong price momentum since August 8.
Moreover, the company has been continuously outperforming its
200-day and 50-day moving averages since August 2012. The
year-to-date return for the stock is 95.3%, compared with the
S&P 500's return of 14.6%.
Headquartered in Mount Laurel, New Jersey, PHH Corporation provides
business process management services for the mortgage and fleet
industries in the United States and Canada. The company was founded
in 1946 and had over 580,000 automobiles and trucks under
management in both sales and service fleets as of June 30, 2012.
With a market capital of about $1.27 billion, PHH Corporation
competes with Ocwen Financial Corp. (
), among others.
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