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Mr. Cooper Q3 Earnings Surpass Estimates, Revenues Decline Y/Y

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Mr. Cooper Group Inc. (COOP - Free Report) reported third-quarter 2024 adjusted earnings per share of $2.84, which beat the Zacks Consensus Estimate by 11.8%. The bottom line rose 1.8% year over year.

Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.

Solid growth in the Servicing and Originations segments were major tailwinds for the company in the third quarter. The servicing portfolio increased year over year, surpassing the $1.2-trillion mark. However, a decline in revenues and an increase in expenses were spoilsports.

Net income of $80 million in the third quarter declined significantly from $275 million a year ago.

COOP’s Revenues & Expenses

Mr. Cooper's total revenues declined 26.1% year over year to $424 million. The top line missed the consensus mark by 20.3%.

Total expenses of $335 million rose 11.3% year over year. 

Interest income of $227 million jumped 35.9% year over year. Interest expenses increased 36.3% year over year to $199 million in the quarter under review.

Mr. Cooper's Segmental Performance

The Servicing segment reported a pretax operating income of $305 million, which rose 1.3% year over year in the third quarter due to portfolio growth and strong operating leverage. Total revenues of $256 million declined from $464 million a year ago. The servicing portfolio increased 32% year over year, surpassing the $1.23-trillion mark.

The Originations segment’s pretax operating income of $69 million increased significantly from $29 million a year ago. Total revenues of $150 million in the third quarter rose from $88 million a year ago. The recapture percentage was 22%, down from 24% a year ago. Funded volume of $6.8 billion rose from the year-ago figure of $3.4 billion.

COOP's Financial Position (As of Sept. 30, 2024)

Mr. Cooper exited the third quarter with total assets of $16.2 billion, higher than $15.8 billion at the end of the second quarter of 2024. Cash and cash equivalents amounted to $733 million, higher than $642 million at the end of the previous quarter.

Net unsecured senior notes were at $4.9 billion, up from the previous quarter’s $4.1 billion. Total liabilities of $11.5 billion at the third-quarter end were higher than $11.2 billion at the end of second-quarter 2024. Total shareholders’ equity rose from $15.8 billion in the previous quarter to $16.2 billion in the third quarter.

Mr. Cooper’s Capital Deployment Update

The company bought back 0.5 million shares for $46 million in the quarter under review.

Our View on COOP

Mr. Cooper ended the third quarter on a decent note, with a strong performance in the Originations segment. A solid balance sheet position is an added advantage. The company’s strong operations, rising profits and shareholder-value-boosting efforts are likely to support its financials in the upcoming period.

MR. COOPER GROUP INC Price, Consensus and EPS Surprise

 

The company currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Performances of Other Consumer Loan Providers

Ally Financial’s (ALLY - Free Report) third-quarter 2024 adjusted earnings of 95 cents per share surpassed the Zacks Consensus Estimate of 81 cents. Also, the bottom line reflected a rise of 14.5% from the year-ago quarter.

In the reported quarter, ALLY witnessed an increase in revenues and lower expenses. Also, capital ratios rose, which was a positive. However, declines in net finance receivables, and loans and deposits were the undermining factors. Also, an increase in provisions hurt the results to some extent.

Sallie Mae (SLM - Free Report) , formally SLM Corporation, reported a third-quarter 2024 loss per share of 23 cents, wider than the Zacks Consensus Estimate of 7 cents. The bottom line compared unfavorably against the prior-year quarter’s earnings of 11 cents. 

A decline in the net interest income and a rise in non-interest expenses negatively impacted SLM’s results. However, lower provisions for credit losses and robust loan originations were positives.


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