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CoreLogic (CLGX) Touches 52-Week High: What's Driving It?

Zacks Equity Research
·4-min read

Shares of CoreLogic, Inc. CLGX hit a 52-week high of $69 in the trading session on Jul 7 (before closing a tad lower at $68.67) after the company rejected the acquisition proposal of $65 per share, or $7 billion, from Senator Investment Group LP and Cannae Holdings Inc. (received on Jun 26).

CoreLogic’s board of directors stated that the acquisition proposal not only undervalues the company but also raises serious regulatory concerns. It also does not seem to be a promising move for its shareholders.

The company’s shares have charted a solid trajectory in recent times, appreciating 57.1% year to date, ahead of 2.2% growth of the industry it belongs to.

 

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Notably, CoreLogic has witnessed a massive 78.7% rise in share price since it posted first-quarter 2020 results.

The company continues to witness solid growth and profitability on the back of favorable revenue mix, higher market volumes, market share gains and benefits of ongoing productivity programs.

Let’s find out what’s supporting the uptick.

Consecutive Earnings & Revenue Beat

CoreLogic came up with better-than-expected earnings and revenue performance in all four quarters of 2019. While the top line benefited from strength in the company’s core mortgage and insurance and spatial solutions, the bottom line was aided by revenue growth, operating leverage, better business mix and cost-efficiency programs.

Raised Q2 Guidance

CoreLogic raised the guidance for the second quarter of 2020. The company is optimistic about its quarterly results on the back of persistent gains in market share along with operational efficiency, driven by higher U.S. mortgage market volumes.

The company now expects revenues of $455-$465 million compared with the prior guidance of $420-$445 million, provided along with first-quarter results on Apr 30. The Zacks Consensus Estimate of $460.19 million lies within the current guidance.

Adjusted EBITDA is now anticipated between $145 million and $150 million compared with the prior guidance of $120-$135 million.

Raised 2020 Guidance

CoreLogic now expects revenues of $1.84-$1.88 billion for 2020 compared with the prior guidance of $1.69-$1.73 billion. The Zacks Consensus Estimate of $1.72 billion is lower than the current guidance.

Adjusted earnings per share are now anticipated between $3.40 and $3.60 compared with the prior guidance of $2.80-$3.00. The Zacks Consensus Estimate of $2.97 is much lower than the current guidance.

Adjusted EBITDA is now anticipated between $565 million and $585 million compared with the prior guidance of $500-$525 million.

Further, the company also provided financial guidance for 2021 and 2022.

For 2021, the company expects revenues in the range of $1.91-$1.95 billion. The Zacks Consensus Estimate of $1.72 billion lies below the guidance. Adjusted EBITDA is anticipated between $595 million and $615 million.

For 2022, the company expects revenues in the range of $2.00-$2.04 billion. Adjusted EBITDA is anticipated between $630 million and $650 million.

The new financial guidance indicates market share gains, major new business wins and the latest estimates of housing market activity.

Shareholder-Friendly Initiatives

CoreLogic has boosted its share-repurchase authorization to $1 billion. The raised share repurchase authorization is in addition to the company’s recently initiated quarterly dividend. The company’s board of directors has adopted a short-term shareholder rights plan to certify that all shareholders are able to enjoy the long-term benefits of their investment in CoreLogic.

Such shareholder friendly moves not only instill investor confidence but also positively impact earnings per share.

Zacks Rank and Other Stocks to Consider

CoreLogic currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader Zacks Business Services sector are DocuSign DOCU, SailPoint Technologies Holdings, Inc. SAIL and ManpowerGroup MAN. All the stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term expected earnings per share (three to five years) growth rate for DocuSign, SailPoint and ManpowerGroup is 31.2%, 15% and 1.5%, respectively.

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CoreLogic, Inc. (CLGX) : Free Stock Analysis Report
 
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