Mr Cooper Group (COOP) AI Stock Analysis

• Market Cap: $7.04B
• Dividend Yield: N/A
• Average Volume (3M): 1.37M
• Price to Earnings (P/E): 10.8
• Beta (1Y): -0.07
• Revenue Growth: 22.89%
• EPS Growth: 39.00%
• Country: US
• Employees: 7,900
• Sector: Financial
• Sector Strength: 81
• Industry: Financial - Mortgages
• EPS (TTM): 10.18
• Shares Outstanding: 63,983,370
• 10 Day Avg. Volume: 2,688,833
• 30 Day Avg. Volume: 1,370,344
• PEG Ratio: 0.28
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.21
• Price to Cash Flow (P/CF): -2.10
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $144.80
• Price Target Upside: 26.58% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

Mr. Cooper Group demonstrates a solid potential for growth, driven by strong financial results and strategic advancements. Key strengths include improved balance sheet health and upward stock momentum. However, historical financial volatility and cash flow issues pose risks. Strategic initiatives and positive earnings sentiment support a favorable outlook.

Positive Factors

Acquisition Synergies

The COOP deal supports at least $500 million of expected synergies, including $100 million of revenue synergies from achieving a stronger recapture rate.

Financial Performance

Mr. Cooper's high refinancing recapture rate significantly reduces downside risk associated with mortgage servicing rights.

Valuation

With COOP shares currently trading at just 7.9x our 2025 operating EPS estimate of $13.50 versus a mortgage operating company median of 9.1x, shares are considered undervalued.

Negative Factors

Mortgage Origination Performance

Mortgage origination operating income of $47M came in just below estimates and at the lower end of the company’s range, and well below the $69M reported in the previous quarter.

Regulatory Concerns

The market is currently pricing in some level of skepticism regarding the deal’s eventual closing, possibly due to concerns from regulatory entities about RKT/COOP’s combined market dominance.

Valuation Downgrade

Downgrading COOP shares to Market Perform from Market Outperform as the shares are now reasonably fairly valued with limited price appreciation potential after the announcement of the acquisition.

Mr Cooper Group Business Overview & Revenue Model

Company Description

Mr. Cooper Group Inc. provides servicing, origination, and transaction-based services related to single-family residences in the United States. The company operates through two segments: Servicing and Originations. The Servicing segment performs activities for underlying mortgages, including collecting and disbursing borrower payments, investor reporting, customer service, and modifying loans. The Originations segment originates residential mortgage loans through its direct-to-consumer channel, as well as originates and purchases loans from mortgage bankers and brokers. It operates primarily under the Mr. Cooper and Xome brands. The company was formerly known as WMIH Corp. and changed its name to Mr. Cooper Group Inc. in October 2018. Mr. Cooper Group Inc. was incorporated in 2015 and is based in Coppell, Texas.

How the Company Makes Money

Mr. Cooper Group generates revenue primarily through its Servicing and Originations segments. In the Servicing segment, the company earns fees by managing a large portfolio of mortgage loans, with income derived from servicing fees, late charges, and ancillary fees associated with mortgage servicing. The Originations segment contributes to revenue through the origination of new mortgage loans and refinancing. This includes earning origination fees, gain on sale of loans, and interest income during the holding period before selling the loans in the secondary market. Additionally, Mr. Cooper may engage in strategic partnerships with financial institutions to expand its service offerings and enhance revenue potential.

Mr Cooper Group Financial Statement Overview

Summary

Mr Cooper Group's financial statements indicate a mixed performance. The income statement shows recent revenue and profit growth, but historical volatility suggests operational risks. The balance sheet reflects strong improvements with zero debt and a robust equity base, enhancing financial stability. However, cash flow management remains a concern, with negative free cash flow trends potentially affecting liquidity if not addressed.

Income Statement

The company shows a fluctuating revenue trajectory with a 24.2% increase from 2023 to 2024. Gross and net profit margins have shown improvement, with the latest gross profit margin at 68.8% and net profit margin at 30.1% for 2024. The EBIT margin also stands strong at 40.7%. However, historical data depicts inconsistency with a decreasing trend from 2021 to 2023. This suggests some volatility in revenue generation and profitability, though the recent year shows a positive rebound.

Balance Sheet

The balance sheet presents a solid equity base with an equity ratio of 25.4% as of 2024, and a return on equity of 13.9%. The significant reduction in total debt to zero by 2024 reflects improved financial stability and reduced leverage risk. However, the company's historical high leverage in previous years poses potential risk exposure if such trends repeat. Overall, the improved equity position and debt reduction are positive indicators of financial health.

Cash Flow

The cash flow statements reveal a concerning trend with negative free cash flow growth in recent years, particularly from 2022 to 2023. Operating cash flow versus net income ratio is negative for 2024, indicating potential cash flow issues despite reported net income. The free cash flow to net income ratio is also negative, which raises concerns about cash flow sustainability. While there are positive financing and investing cash flow activities, the operational cash flow challenges need addressing.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
2.23B	1.79B	2.46B	3.32B	3.07B
	Gross Profit
1.53B	620.00M	1.43B	1.80B	1.30B
	EBIT
906.00M	661.00M	990.00M	2.36B	534.00M
	EBITDA
964.00M	699.00M	1.03B	2.42B	980.00M
	Net Income Common Stockholders
669.00M	500.00M	923.00M	1.45B	305.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
753.00M	571.00M	527.00M	895.00M	695.00M
	Total Assets
18.94B	14.20B	12.78B	14.20B	24.16B
	Total Debt
11.39B	7.45B	5.56B	7.67B	13.30B
	Net Debt
10.63B	6.88B	5.03B	6.77B	12.61B
	Total Liabilities
14.13B	9.91B	8.72B	10.84B	21.66B
	Stockholders Equity
4.81B	4.28B	4.06B	3.37B	2.50B
Cash Flow		Free Cash Flow
-762.00M	-972.00M	2.15B	1.67B	144.00M
	Operating Cash Flow
-724.00M	896.00M	3.77B	2.63B	331.00M
	Investing Cash Flow
-2.70B	-1.84B	-1.32B	1.19B	-134.00M
	Financing Cash Flow
3.65B	978.00M	-2.78B	-3.70B	104.00M

Mr Cooper Group Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 114.39
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For COOP, the sentiment is Positive. The current price of 114.39 is below the 20-day moving average (MA) of 115.07, above the 50-day MA of 109.98, and above the 200-day MA of 97.17, indicating a neutral trend. The MACD of 2.17 indicates Positive momentum. The RSI at 50.73 is Neutral, neither overbought nor oversold. The STOCH value of 30.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for COOP.

Mr Cooper Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
THG	82 Outperform	$5.75B	13.62	16.03%	2.24%	4.07%	1110.92%
COOP	72 Outperform	$7.04B	10.80	14.71%	―	22.89%	39.00%
PB	72 Outperform	$6.25B	13.01	6.60%	3.52%	11.96%	11.66%
FAF	68 Neutral	$6.29B	48.50	2.69%	3.53%	-2.03%	-39.52%
SNV	67 Neutral	$5.65B	13.21	9.31%	3.82%	0.83%	-11.72%
Sector *	63 Neutral	$12.75B	9.36	8.64%	84.32%	13.82%	-3.89%
VOYA	63 Neutral	$5.53B	9.32	16.27%	3.04%	9.55%	10.22%

Mr Cooper Group Corporate Events

Mr Cooper Group Merges with Rocket Companies

On March 31, 2025, Rocket Companies, Inc. entered into a merger agreement with Mr. Cooper Group Inc., involving the merger of Maverick Merger Sub with Mr. Cooper, making Mr. Cooper a wholly owned subsidiary of Rocket. The merger, valued at $9.4 billion, involves an exchange of Mr. Cooper shares for Rocket’s Class A common stock and includes a special cash dividend for Mr. Cooper’s stockholders. The merger is subject to customary closing conditions, regulatory approvals, and stockholder votes, with provisions for termination under specified circumstances. Additionally, Mr. Cooper adopted a Change in Control Executive Severance Plan for its executive officers, excluding the CEO, providing severance benefits in case of employment termination following a change in control.

Rocket Companies to Acquire Mr Cooper Group

On March 31, 2025, Mr. Cooper Group Inc. and Rocket Companies, Inc. announced a definitive agreement for Rocket to acquire all outstanding shares of Mr. Cooper in an all-stock transaction. This merger is expected to accelerate Rocket’s mission to assist homeowners and could significantly impact the operations and market positioning of both companies. The transaction is subject to various conditions, including stockholder approval, and carries potential risks such as management distractions and legal proceedings.