Mr Cooper up 20% on Q4 results: we’ll benefit from higher interest rates

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Mr Cooper Group Inc (NASDAQ: COOP) went up roughly 20% in the stock market to a 52-week high on Friday after reporting better-than-expected results for its fiscal fourth quarter.

What the Q4 earnings report tells us

Mr Cooper said it earned $2.01 on a per-share basis on $625 million in revenue – both ahead of experts’ forecast. In the comparable quarter of last year, it had posted $2.0 of EPS and $190 million in revenue.

The board authorised another $200 million share buyback, bringing the total to $252 million. The mortgage company had its tangible book value jump to $43.82 per share. Servicing UPB was up 17% year-over-year, but originations volume was down. In the earnings press release, CFO Chris Marshall said:

Q4 capped a year of terrific improvement in the balance sheet, with record levels of capital and liquidity and significant advancements in many of our technology initiatives. Our team is perfectly positioned to capitalise on the strong momentum we have across our business.

CEO Bray’s remarks on CNBC’s ‘The Exchange’

According to CEO Jay Bray, a balanced business model positions the company well to benefit from the upcoming rate hikes. On CNBC’s “The Exchange”, he said:

In our servicing business, with rising rates, the value of our assets could go up by $400 million, and it also helps the profitability in this business. We’re marching towards a $1.0 trillion in servicing from $710 billion now. We see a 15% plus growth in our portfolio this year.

Also on Friday, Mr Cooper partnered with Sagent to create the industry’s first cloud-native servicing platform. The stock now trades at a PE multiple of 3.0.

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