Why Ocwen's Huge Earnings Miss Doesn't Matter
NEW YORK (TheStreet) -- Ocwen Financial (OCN) - Get Report reported third-quarter earnings that widely missed analyst estimates, though the company argued, credibly enough, this was due to timing of integrating an acquisition -- issues it said it has now dealt with.
First, the size of the miss: Ocwen reported third-quarter earnings of 44 cents per share, vs. consensus estimates of $1.09. Revenue of $531 million was up 128% vs. a year ago, but 10.5% short of estimates.
Ocwen Chairman Bill Erbey said in a statement accompanying the release that revenue was "suppressed due to delays, that have now been resolved, in boarding the OneWest transaction." Ocwen acquired mortgage servicing rights on $30 billion in unpaid principal on outstanding mortgages from OneWest, the former IndyMac, in August and September.
Oppenheimer analyst Ben Chittenden, who had forecast $1.15, called the results "somewhat disappointing from a quarterly perspective," but added, "we don't think that it changes the longer-term story and is more of a timing issue," according to a research note published Thursday shortly after Ocwen released its results. He advised investors to use any weakness as a buying opportunity.
Ocwen shares were down 1.86% to $57.95 in early trading Thursday ahead of a scheduled 11 a.m. conference call.
--Written by Dan Freed in New York
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