PHH Corp Stock Upgraded (PHH)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- PHH (NYSE: PHH) has been upgraded by TheStreet Ratings from sell to hold. The company's strongest point has been its a solid financial position based on a variety of debt and liquidity measures that we have looked at. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

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Highlights from the ratings report include:
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The revenue fell significantly faster than the industry average of 11.3%. Since the same quarter one year prior, revenues fell by 35.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • PHH CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, PHH CORP increased its bottom line by earning $1.47 versus $0.45 in the prior year. For the next year, the market is expecting a contraction of 133.3% in earnings (-$0.49 versus $1.47).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Diversified Financial Services industry and the overall market, PHH CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for PHH CORP is rather low; currently it is at 19.77%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -22.43% is significantly below that of the industry average.

PHH Corporation provides outsourced mortgage and fleet management services in the United States and Canada. The company operates through three segments: Mortgage Production, Mortgage Servicing, and Fleet Management Services. PHH has a market cap of $1.32 billion and is part of the financial sector and financial services industry. Shares are down 5.5% year to date as of the close of trading on Wednesday.

You can view the full PHH Ratings Report or get investment ideas from our investment research center.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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