02/02/15 - 12:18 PM EST
NEW YORK (TheStreet) -- Shares of Ocwen Financial (OCN - Get Report) rose 3.59% to $6.34 in early afternoon trading Monday after the Federal Housing Finance Agency proposed new minimum financial eligibility requirements for Fannie Mae and Freddie Mac sellers and servicers on Friday.
The FHFA's proposed standards are aimed at non-bank mortgage companies such as Ocwen that occasionally originate mortgages but also buy the right from lenders to collect mortgage payments from borrowers, send payments to mortgage investors, and process foreclosures, according to the Wall Street Journal.
The Journal notes the requirements appear to be less strict than some analysts had expected; however, the proposed standards could affect some borrowers' ability to access mortgages because some of the non-banks could have to divert resources in order to meet the requirements.
More than 3.7 million shares had changed hands as of 12:15 p.m., compared to the daily average volume of 7,030,740.
Separately, TheStreet Ratings team rates OCWEN FINANCIAL CORP as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate OCWEN FINANCIAL CORP (OCN) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly increased by 143.32% to $348.99 million when compared to the same quarter last year. Despite an increase in cash flow of 143.32%, OCWEN FINANCIAL CORP is still growing at a significantly lower rate than the industry average of 241.56%.
- Despite the weak revenue results, OCN has outperformed against the industry average of 19.3%. Since the same quarter one year prior, revenues slightly dropped by 2.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 87.19%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 248.71% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Thrifts & Mortgage Finance industry. The net income has significantly decreased by 224.4% when compared to the same quarter one year ago, falling from $60.57 million to -$75.38 million.
- You can view the full analysis from the report here: OCN Ratings Report
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