CoreLogic Looking Beyond Real EstateDATA: Year-old company eyes fraud, risk offerings for growth Sunday, May 15, 2011
That’s “generally disappointing,” according to a report from New York’s TheStreet Ratings, given the gains seen by other information technology companies and the S&P 500, which is up 15% in the past 12 months.
TheStreet last week upgraded its outlook on CoreLogic’s stock from “sell” to “hold” but noted “investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve.”
Earnings reports that provide few clear comparisons to prior quarters could be having some effect on the market’s indifference.
The company has seen a series of current quarter and year earlier charges and gains that have yet to give way to regular consistency.
Expect to see more changes.
CoreLogic’s increasingly emphasizing its more profitable data and analytics line of businesses, which includes risk and fraud products, as well as specialty finance products for the auto and other industries, according to Nallathambi.
CoreLogic’s data and analytics division was responsible for about 43% of the company’s $1.6 billion in revenue last year. It was the company’s most profitable division in the first quarter.
With continued challenges in housing and mortgages, the group’s expected to provide a larger source of profits this year, according to Nallathambi.
The company’s business and information services division, which represented 55% of its revenue in 2010, isn’t expected to be as big a money maker for CoreLogic this year.
The lower-profit business lines in that division include CoreLogic’s appraisal services group and its escrow services businesses, among others.
First-quarter revenue for the appraisal services group was off 27% to $25.8 million, with fewer mortgages being made at some large customers, according to CoreLogic.
Increased regulatory oversight on appraisal services could lead to additional risk and less attractive prices, Nallathambi told analysts.
That could prompt the company to forgo some appraisal business, he said.
Last week, the FDIC filed a lawsuit against CoreLogic seeking to recover at least $129 million in losses tied to appraisals that a CoreLogic affiliate conducted for Washington Mutual Inc., now part of JPMorgan Chase & Co.
The case involves 194 appraisals CoreLogic’s eAppraiseIT unit did for WaMu in 2006 and 2007. The FDIC charges the appraisals broke federal and state laws, regulatory guidelines and general appraisal industry standards, according to the suit.
A similar suit was filed last week by the FDIC against Jacksonville, Fla.-based Lender Processing Services, a competitor of CoreLogic that has an Irvine office.
The suit mirrors a similar case filed against First American in New York in 2007 by the state’s attorney general. That case is ongoing.
CoreLogic said in a regulatory filing last week that it believes “the FDIC’s factual allegations, legal theories and damage calculations have many flaws.”
The company said it intends to defend itself against the suit.
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