Why Mr. Cooper Group Stock Sank While the Market Soared on Wednesday

Mr. Cooper Group (NASDAQ: COOP) released its first-quarter earnings report before market open Wednesday, and this set the tone for its stock throughout the session.

Since the company missed dramatically on both the top and bottom lines the shares ended up closing down by more than 1% in value. That compared most unfavorably to the almost 2% increase of the benchmark S&P 500 index.

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A pair of wide misses

In Mr. Cooper's inaugural quarter of the year, revenue totaled $560 million, quite some distance down from the $654 million of Q1 2024. The decline was steeper on the bottom line, as the company eked out a generally accepted accounting principles (GAAP) net income figure of $88 million ($1.35 per share) against the year-ago profit of $204 million.

Neither headline figure came close to its average analyst estimate. Pundits tracking Mr. Cooper stock were modeling over $620 million for revenue, and a per-share GAAP earnings figure of $2.98.

The company, which specializes in loan services for homeowners, did see growth in several operational metrics. It said its loan servicing portfolio grew by 33% year over year to over $1.5 trillion during the quarter. Its operating income improved to $332 million from Q1 2024's $318 million.

Waxing optimistic

In its earnings release, management put a positive spin on the figures. CEO Jay Bray said its first-quarter performance demonstrated "the power of our platform to deliver consistent, recurring, and predictable results, as well as higher returns."

That doesn't jibe with the numbers produced during the period, hence the negative investor reaction. They'll be looking for improvements in the fundamentals, and soon.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.