Tree.com (TREE) Soars 8.0%: Is Further Upside Left in the Stock?

Tree.com (TREE) shares rallied 8% in the last trading session to close at $38.32. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 38.7% loss over the past four weeks.

The company’s shares moved sharply higher after it completed a 1-for-10 reverse stock split aimed at improving listing compliance and enhancing its appeal to institutional investors. The move comes as TREE continues to reposition its marketplace toward higher-margin verticals such as credit cards and personal loans to improve profitability and operating leverage. Adding to the positive momentum, mortgage rates recently declined to their lowest level in more than three years. The decline in borrowing costs is expected to support home purchase and refinancing activity, driving higher loan inquiry volumes and supporting the company’s revenue outlook.

This mortgage lending service provider is expected to post quarterly earnings of $0.90 per share in its upcoming report, which represents a year-over-year change of -22.4%. Revenues are expected to be $286.75 million, up 9.7% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Tree.com, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on TREE going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Tree.com is part of the Zacks Financial - Mortgage & Related Services industry. loanDepot (LDI), another stock in the same industry, closed the last trading session 4.2% higher at $1.98. LDI has returned -19.8% in the past month.

loanDepot's consensus EPS estimate for the upcoming report has remained unchanged over the past month at -$0.04. Compared to the company's year-ago EPS, this represents a change of +82.6%. loanDepot currently boasts a Zacks Rank of #3 (Hold).

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This article originally published on Zacks Investment Research (zacks.com).

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