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Onity Group (ONIT)
NYSE:ONIT
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Onity Group
(NYSE:ONIT)
Rating:62Neutral
Price Target:
$41.00
▲( 8.90% Upside)
Onity Group (ONIT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$317.06M
Dividend YieldN/A
Average Volume (3M)47.98K
Price to Earnings (P/E)13.2
Beta (1Y)1.28
Revenue Growth-3.14%
EPS Growth264.15%
CountryUS
Employees4,200
SectorFinancial
Sector Strength82
IndustryFinancial - Mortgages
Share Statistics
EPS (TTM)2.50
Shares Outstanding8,008,515
10 Day Avg. Volume44,766
30 Day Avg. Volume47,977
Financial Highlights & Ratios
PEG Ratio0.05
Price to Book (P/B)0.50
Price to Sales (P/S)0.00
P/FCF Ratio-0.28
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$50.00Price Target Upside32.80% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Onity Group Business Overview & Revenue Model
Company DescriptionOnity Group Inc., a financial services company, originates and services forward and reserve mortgage loans in the United States, the United States Virgin Islands, India, and the Philippines. It operates through the Servicing and Originations segments. The company offers owned mortgage servicing rights and subservicing products; conventional, government-insured, and non-agency mortgage loans, as well as reverse mortgage and multi-family loans; and residential forward mortgage and small commercial mortgage loans. It also originates and purchases conventional and government-insured residential forward and reverse mortgage loans through its correspondent lending arrangements, broker relationships, and retail channels. The company offers its services under the PHH Mortgage and Liberty Reverse Mortgage brands. It serves financial institutions. The company was formerly known as Ocwen Financial Corporation and changed its name to Onity Group Inc. in June 2024. Onity Group Inc. was founded in 1988 and is headquartered in West Palm Beach, Florida.
How the Company Makes Moneynull
Onity Group Financial Statement Overview
Summary
Onity Group faces significant financial challenges, highlighted by declining revenue, high leverage, and negative cash flows. Improvements in net income and stockholders' equity are overshadowed by operational and cash flow difficulties.Income Statement
The company's income statement shows mixed results. There is a declining trend in revenue from 2023 to 2024, with total revenue dropping from $1.14 billion to $1.07 billion. The gross profit margin has decreased, and the net income moved from a loss in 2023 to a modest profit in 2024. However, EBIT is zero in 2024, indicating operational challenges. The net profit margin improved from a negative in 2023 to a positive, but still low, in 2024, suggesting an ongoing struggle to convert revenue into profit.55
Neutral
Balance Sheet
The balance sheet reveals a high debt-to-equity ratio, indicating significant leverage, which increases financial risk. Stockholders' equity has increased since 2023, which is a positive sign of improved equity position, yet the equity ratio remains low due to high total liabilities. The return on equity remains low, reflecting limited profitability relative to equity.45
Neutral
Cash Flow
Cash flow analysis shows considerable challenges, with negative operating cash flow and free cash flow in 2024 indicating cash outflows. The operating cash flow to net income ratio is unfavorable, suggesting difficulties in converting net income into cash. The negative free cash flow growth rate emphasizes ongoing struggles in generating cash from operations.40
Negative
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.07B | 1.14B | 877.20M | 1.05B | 951.06M | Gross Profit |
| 495.60M | 584.50M | 797.50M | 927.00M | 854.67M | EBIT |
| 0.00 | 392.40M | 14.80M | 10.27M | 19.12M | EBITDA |
| 256.10M | 238.80M | 408.70M | 451.90M | 175.50M | Net Income Common Stockholders |
| 33.90M | -63.70M | 25.70M | -4.37M | -105.68M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 184.80M | 213.10M | 274.20M | 263.45M | 357.26M | Total Assets |
| 16.44B | 12.51B | 1.10B | 1.34B | 963.59M | Total Debt |
| 14.74B | 10.93B | 8.44B | 8.56B | 7.90B | Net Debt |
| 14.55B | 10.73B | 8.17B | 8.30B | 7.54B | Total Liabilities |
| 15.94B | 12.11B | 100.00K | 92.00K | 87.00K | Stockholders Equity |
| 492.90M | 401.80M | 12.40B | 12.15B | 10.65B |
| Cash Flow | Free Cash Flow | |||
| -807.00M | -111.80M | -61.80M | -1.34B | -229.64M | Operating Cash Flow |
| -573.80M | 10.40M | 144.90M | -492.77M | 47.68M | Investing Cash Flow |
| 401.30M | -100.30M | -120.80M | -980.83M | -314.58M | Financing Cash Flow |
| 182.90M | 70.80M | -13.40M | 1.38B | 131.83M |
Onity Group Technical Analysis
Positive
37.65
Price Trends
33.33
Positive
33.30
Positive
31.63
Positive
Market Momentum
1.49
Positive
53.75
Neutral
32.75
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ONIT, the sentiment is Positive. The current price of 37.65 is above the 20-day moving average (MA) of 37.35, above the 50-day MA of 33.33, and above the 200-day MA of 31.63, indicating a neutral trend. The MACD of 1.49 indicates Positive momentum. The RSI at 53.75 is Neutral, neither overbought nor oversold. The STOCH value of 32.75 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ONIT.
Onity Group Risk Analysis
Onity Group disclosed 64 risk factors in its most recent earnings report. Onity Group reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
A disruption in the mortgage capital markets may affect our financial and results of operations. Q4, 2024
Onity Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $609.41M | 8.54 | 13.62% | ― | 32.62% | 16.91% | |
64 Neutral | $12.78B | 9.87 | 7.67% | 17015.06% | 12.34% | -5.99% | |
62 Neutral | $317.06M | 13.21 | 5.50% | ― | -3.14% | 264.15% | |
54 Neutral | $255.05M | 10.26 | 7.02% | ― | 5.03% | 83.63% | |
51 Neutral | $818.69M | 18.95 | 3.71% | 3.89% | 42.92% | 64.72% | |
49 Neutral | $2.43B | 24.56 | 5.62% | 3.90% | 6.68% | 6.08% | |
48 Neutral | $425.58M | ― | -29.48% | ― | 3.76% | 16.19% |
* Financial Sector Average
Performance Comparison
ONIT
Onity Group
36.89
12.59
51.81%
SNFCA
Security National Financial
9.80
2.32
31.02%
WD
Walker & Dunlop
66.80
-24.55
-26.87%
LDI
loanDepot
1.19
-0.83
-41.09%
VEL
Velocity Financial
16.48
-1.51
-8.39%
GHLD
Guild Holdings
12.76
-0.95
-6.93%
Onity Group Earnings Call Summary
Earnings Call Date:Apr 30, 2025
(Q1-2025)
| % Change Since: 5.97%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Positive
The earnings call reflects strong financial performance and strategic growth, particularly in servicing and originations. The company's focus on technology and customer satisfaction has yielded positive results. However, challenges in subservicing additions, legal expenses, and market volatility present concerns.Q1-2025 Updates
Positive Updates
Strong Financial Performance
Adjusted pre-tax income of $25 million and an annualized adjusted ROE of 22%, exceeding guidance. GAAP net income attributable to common shareholders was $21 million or $2.50 per share fully diluted, reflecting an annualized return on equity of 19%.
Increase in Servicing UPB
Average servicing UPB of $305 billion for the quarter is up $13 billion versus the first quarter of 2024.
Growth in Owned MSR Editions
Owned MSR editions more than doubled versus the first quarter of 2024.
Book Value Per Share Increase
Book value per share was up approximately 4% versus Q1 2024 and up approximately 2% versus year-end 2024.
Successful Technology Investments
89% of customer inquiries handled through digital interface channels and robotic process automation, saving over 60,000 manual work hours a month.
High Customer Satisfaction
4.6 and 4.1 out of 5 star satisfaction rating for call center and load boarding performance respectively; 61 net promoter score from sub-servicing clients.
New Product Launches and Growth
Enhanced closed and second lean product saw lock volume 3.6 times the same period last year. Proprietary equity IQ reverse mortgage product launched on schedule.
Strong Origination Growth
Originations volume grew 53% versus Q1 2024, and consumer direct channel volume grew by about 165%.
Negative Updates
Challenges in Subservicing Additions
Total servicing additions of $17 billion is down from the first quarter of 2024, primarily due to lower subservicing additions related to the timing of bulk boardings.
Legal Expenses Impact
Legal expense related to an agreement in principle to resolve a nearly two-decade-old legacy class action litigation matter.
Interest Rate and Market Volatility
Expectation of continued interest rate and GSC price volatility likely to impact hedge costs and drive unpredictable surges in refinancing activity and origination margin volatility.
Company Guidance
During the Onity Group's first quarter 2025 earnings call, the company provided guidance highlighting strong financial performance despite challenging market conditions. They reported an adjusted pre-tax income of $25 million and an annualized adjusted return on equity (ROE) of 22%, surpassing their guidance. The GAAP net income attributable to common shareholders was $21 million, or $2.50 per share fully diluted, reflecting a 19% annualized ROE. The average servicing unpaid principal balance (UPB) was $305 billion, marking a $13 billion increase from the first quarter of 2024. The company also noted a 4% increase in book value per share compared to Q1 2024. Onity maintained its full-year 2025 guidance, expecting servicing book growth to exceed 10% year-over-year, with a stable efficiency ratio and a consistent hedge ratio of 90% to 110%. The Mortgage Bankers Association and Fannie Mae projected a 17% increase in industry origination volumes, contingent on a 9% rise in home purchase volume and a 39% jump in refinancing volume.Onity Group Corporate Events
Shareholder Meetings
Onity Group Holds Annual Shareholder Meeting
Neutral
May 21, 2025
On May 21, 2025, Onity Group held its Annual Meeting of Shareholders where three key proposals were voted on. Shareholders elected directors for one-year terms, ratified Deloitte & Touche LLP as the independent registered public accounting firm for 2025, and approved the executive compensation on a non-binding advisory basis.
The most recent analyst rating on (ONIT) stock is a Buy with a $40.00 price target. To see the full list of analyst forecasts on Onity Group stock, see the ONIT Stock Forecast page.
Business Operations and StrategyFinancial Disclosures
Onity Group Reports Strong Q1 2025 Performance
Positive
Mar 20, 2025
On March 20, 2025, Onity Group Inc. hosted an investor presentation at the Sidoti March Virtual Investor Conference, where they provided a preliminary update on their financial and operating performance for the first quarter of 2025. The company reported a significant increase in originations volume compared to the first quarter of 2024, driven by their Correspondent and Co-Issue channels. Additionally, Onity launched an improved closed-end second originations product in February 2025, which has been well received by borrowers. The company also made progress in servicing growth, completing bulk MSR purchases, and adding new subservicing clients. Effective hedging strategies have contributed to consistent net income and GAAP ROE results, and there is potential for releasing some or all of the valuation allowance against its $180 million net U.S. deferred tax asset by year-end 2025.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.