NEW YORK (TheStreet) -- PHH (PHH) was gaining 6.1% to $25.70 Wednesday following an earnings report that beat analyst estimates for earnings and revenue, and news that it is exploring alternatives for its outsourcing fleet and mortgage management businesses.
In its fourth-quarter results the company posted earnings of 28 cents a share. Analysts surveyed by Thomson Reuters expected earnings of 7 cents a share for the quarter. PHH reported revenue of $675 million for the quarter, beating analyst estimates of $636.4 million.
PHH also announced that it is looking into ways of maximizing shareholder value by separating or selling off its fleet business, its mortgage business, or both.
TheStreet Ratings team rates PHH CORP as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate PHH CORP (PHH) 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 notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly increased by 175.60% to $802.00 million when compared to the same quarter last year. In addition, PHH CORP has also vastly surpassed the industry average cash flow growth rate of 17.68%.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Diversified Financial Services industry and the overall market on the basis of return on equity, PHH CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The debt-to-equity ratio is very high at 3.59 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
- 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 Diversified Financial Services industry. The net income has decreased by 23.8% when compared to the same quarter one year ago, dropping from -$42.00 million to -$52.00 million.
- You can view the full analysis from the report here: PHH Ratings Report