Strength Seen in Onity (ONIT): Can Its 6.5% Jump Turn into More Strength?

Onity Group (ONIT) shares soared 6.5% in the last trading session to close at $28. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 11.1% loss over the past four weeks.

Onity Group witnessed a strong price increase following the news that the company is reportedly considering options to sell its mortgage servicing rights division –  a capital restructuring effort to accelerate capital allocation. Also, the company is expected to witness a significant increase in originations volume in the first quarter of 2025 compared to the year-ago period, thanks to improved channels and a well-received closed-end second originations product (launched in February 2025). These factors have boosted investors' confidence in the stock.

This mortgage servicer is expected to post quarterly earnings of $1.90 per share in its upcoming report, which represents a year-over-year change of +9.2%. Revenues are expected to be $259.96 million, up 8.7% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Onity, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on ONIT 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 >>>>

Onity belongs to the Zacks Financial - Mortgage & Related Services industry. Another stock from the same industry, PennyMac Financial (PFSI), closed the last trading session 3.7% lower at $92.41. Over the past month, PFSI has returned 0.1%.

PennyMac's consensus EPS estimate for the upcoming report has changed +1.1% over the past month to $2.99. Compared to the company's year-ago EPS, this represents a change of +20.6%. PennyMac currently boasts a Zacks Rank of #4 (Sell).

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

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