CoreLogic: Zacks’ Bull of the Day Play

Corelogic (CLGXSnapshot Report) getting it right has never been as important as it is right now. That sort of cliche always seems to make sense, but for the banks that are taking on big risks via substantial mortgage commitments, it has never been more dead on. CGLX Zacks Rank #1 (Strong Buy) and it helps banks and others involved in real estate get the information they need to make better decisions. It is the Bull of The Day.Housing In Peril

That headline might draw your ire, but the idea is that buyers and developers are going to be scrutinized harder than ever. Why is that? As oil has collapsed, the junk bond market has taken a big hit, and that could translate into significant losses for major financial institutions. That, in turn, will reduce the appetite for risk and cause banks to not back some of the more risky bets.

That lack of liquidity to the system should have an impact on real estate buyers over the coming months. That

Company Description

CoreLogic provides property, financial and consumer information, analytics, and services. The company operates through two segments, Technology and Processing Solutions and Data & Analytics. CoreLogic was incorporated in 1894 and is headquartered in Irvine, California.

Earnings History

The last several quarters were not the model of consistency that investors would want to see. The company beat the Zacks Consensus Estimate in four of the last seven quarters, but also missed in two quarters. Math majors would have already come to the conclusion that there was one quarter that saw the company meet the Zacks Consensus Estimate.

The most recent quarter was a solid one, with the company reporting EPS of $0.42, $0.07 ahead of the Zacks Consensus Estimate of $0.35. That translates into a positive earnings surprise of 20%, but as much as the beat was nice, I prefer to look at the topline.

CLGX reported revenue of $367M, $15M ahead of the Zacks Consensus of $352M. That 4.3% positive revenue surprise is the largest beat since teh June 2013 quarter that also saw a $15M beat of the Zacks Consensus Estimate for revenue.

When the company reported these earnings in late October, they also gave guidance. The expects to see revenue of $1.39B -$1.41B, which is higher than the Wall Street consensus Of $1.35B.

Earnings Estimates

Analysts liked what they heard and moved FY14 estimates higher to $1.18 from the $1.07 level they were at in September. For the majority of the year the estimate had been within a penny or two of $1.25.

The 2015 Zacks Consensus Estimate moved higher as well, running up from $1.51 to $1.60. That is still shy of the $1.64 level that the estimate held for much of the year. When estimates for 2015 were released, some over zealous analysts put the number as high as $1.88-$1.91. Time will tell if a few solid quarters will result in the company achieving that level of earnings.

Valuation

The valuation for CLGX is mostly in line with the industry average, but there is a slight bias to this stock trading at a slight discount to the industry average. The trailing PE of 29x is higher than the 24x industry average, and the forward PE of 26x is also above the 22x industry average… but that is the only metric that carries any sort of premium. The price to book multiple of 2.6x is well below the 4.4x industry average and the price to sales multiple of 2.8x is also show the stock trading at a discount to the industry average.

Chart

Zacks has developed a chart that helps investors see how earnings estimates have impacted the price of the stock over the last several years. We call this chart the price and consensus chart, and each color coded lines represents analyst estimates over a designated year. As estimates increase, the stock tends to follow. The Zacks Rank is impacted by earnings estimate increases, beats and incorporates the idea of analyst agreement and magnitude. As a Zacks Rank #1 (Strong Buy) we see that estimates are moving higher.

Follow Brian Bolan on twitter at @BBolan1

Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Home Run Investor service, a Buy and Hold service where he recommends the stocks in the portfolio.

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