Strength Seen in Mr Cooper (COOP): Can Its 14.5% Jump Turn into More Strength?

Mr Cooper (COOP) shares rallied 14.5% in the last trading session to close at $119.60. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 7% loss over the past four weeks.

After two consecutive trading days of sliding, shares of COOP surged yesterday on the back of the announcement of an acquisition deal. The company is getting acquired by Rocket Companies, Inc. RKT in an all-stock deal valued at $9.4 billion. This will create a mortgage behemoth in the United States, with the combined firm servicing $2.1 trillion of loans and 9.5 million clients.

Under the terms of the agreement, COOP shareholders will get 11 RKT shares for each Mr. Cooper share. The transaction is expected to drive higher loan volume and long-term client relationships, thus providing greater recurring revenue and lowering client acquisition costs.

This reinsurance company is expected to post quarterly earnings of $2.91 per share in its upcoming report, which represents a year-over-year change of +27.6%. Revenues are expected to be $624.03 million, up 10.6% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Mr Cooper, the consensus EPS estimate for the quarter has been revised 1.1% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on COOP going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Mr Cooper belongs to the Zacks Financial - Consumer Loans industry. Another stock from the same industry, Ezcorp (EZPW), closed the last trading session 0.3% higher at $14.72. Over the past month, EZPW has returned 6.7%.

Ezcorp's consensus EPS estimate for the upcoming report has changed +1.6% over the past month to $0.33. Compared to the company's year-ago EPS, this represents a change of +17.9%. Ezcorp currently boasts a Zacks Rank of #1 (Strong Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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