Mr. Cooper Group Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Investors in Mr. Cooper Group Inc. (NASDAQ:COOP) had a good week, as its shares rose 2.5% to close at US$30.05 following the release of its full-year results. Mr. Cooper Group missed revenue estimates by 2.0%, with sales of US$2.7b, although statutory earnings per share (EPS) of US$3.20 beat expectations, coming in 8.5% ahead of analyst estimates. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Mr. Cooper Group

Taking into account the latest results, the consensus forecast from Mr. Cooper Group's six analysts is for revenues of US$3.33b in 2021, which would reflect a substantial 22% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to jump 79% to US$5.92. Before this earnings report, the analysts had been forecasting revenues of US$2.78b and earnings per share (EPS) of US$4.66 in 2021. So we can see there's been a pretty clear increase in sentiment following the latest results, with both revenues and earnings per share receiving a decent lift in the latest estimates.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 9.2% to US$37.14per share. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Mr. Cooper Group, with the most bullish analyst valuing it at US$40.00 and the most bearish at US$32.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Mr. Cooper Group's revenue growth is expected to slow, with forecast 22% increase next year well below the historical 68%p.a. growth over the last five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 1.8% next year. Factoring in the forecast slowdown in growth, it's pretty clear that Mr. Cooper Group is still expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Mr. Cooper Group's earnings potential next year. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Mr. Cooper Group going out to 2023, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Mr. Cooper Group that you should be aware of.

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