Analysts Are Updating Their Ocwen Financial Corporation (NYSE:OCN) Estimates After Its First-Quarter Results

Ocwen Financial Corporation (NYSE:OCN) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. The results were positive, with revenue coming in at US$262m, beating analyst expectations by 4.4%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Ocwen Financial

Taking into account the latest results, the most recent consensus for Ocwen Financial from four analysts is for revenues of US$1.04b in 2023 which, if met, would be a modest 5.5% increase on its sales over the past 12 months. Ocwen Financial is also expected to turn profitable, with statutory earnings of US$2.57 per share. In the lead-up to this report, the analysts had been modelling revenues of US$1.04b and earnings per share (EPS) of US$2.43 in 2023. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at US$41.67, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Ocwen Financial analyst has a price target of US$50.00 per share, while the most pessimistic values it at US$35.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Ocwen Financial shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Ocwen Financial's past performance and to peers in the same industry. For example, we noticed that Ocwen Financial's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 7.3% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 2.6% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 9.1% per year. Although Ocwen Financial's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Ocwen Financial following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Ocwen Financial's revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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. We have estimates - from multiple Ocwen Financial analysts - going out to 2024, and you can see them free on our platform here.

You can also see whether Ocwen Financial is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.