Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) closed up more than 24% on the back of better-than-expected earnings.
So what: Altisource Portfolio Solutions reported revenue of $207.8 million for the first quarter, a decrease of 1% from the prior year. Adjusted net income fell to $11.8 million, 76% lower than the same quarter last year.
Further adjusting the numbers for one-time expenses related to cost cuts, the company would have reported adjusted net income of $24.3 million for the quarter. On a GAAP basis, Altisource earned $3.7 million, or $0.18 per diluted share.
Battered mortgage servicer Ocwen Financial Corp. (NYSE:OCN) used Altisource's REALServicing platform to manage 2.401 million loans in the first quarter, down only modestly from 2.448 million loans in the prior quarter. In addition, its online listing service Hubzu.com reported that it sold 24% more homes compared to the year-ago period.
Notably, Hubzu's growth came mostly from non-Ocwen homes, likely the result of Altisource's bolt-on acquisition of Owners.com in November 2014.
Now what: Altisource has come under the radar for its close relationship with Ocwen Financial, a mortgage servicer embroiled in legal battles over allegations of improper servicing of mortgage loans. As Altisource works to diversify its revenue sources away from Ocwen, no terribly bad news in its "legacy" relationships with Ocwen has become good news for the stock.
Investors will want to see that the company can simply maintain its Ocwen-derived revenue while building new income streams to insulate the business from key customer risk -- a risk that reared its ugly head over the past 16 months.