NEW -- Contrarian Alert!
New Century Financial Corporation (New Century) (NYSE NEW @$15.50) is a real estate investment trust (REIT), and through its subsidiaries, operates one of the mortgage finance companies. The Company originates and purchases primarily first-mortgage loans worldwide. The Company focuses on lending to individuals whose borrowing needs are generally not fulfilled by traditional financial institutions because they do not satisfy the credit, documentation or other underwriting standards prescribed by conventional mortgage lenders and loan buyers. The Company originates and purchases mortgage loans through two divisions: Wholesale Division and Retail Division. In September 2005, the New Century acquired a mortgage origination platform from RBC Mortgage Company (RBC Mortgage), which expands its offerings to include conventional mortgage loans, including Alt-A mortgage loans, loans insured by the Federal Housing Administration (FHA), and loans guaranteed by the Veterans Administration (VA).
Market Cap (intraday): 860.89M
Enterprise Value (24-Feb-07): 22.93B
Trailing P/E (ttm, intraday): 2.31
Forward P/E (fye 31-Dec-07): 12.62
PEG Ratio (5 yr expected): 0.94
Price/Sales (ttm): 0.68
Price/Book (mrq): 0.44
Qtrly Revenue Growth (yoy): -19.00%
Qtrly Earnings Growth (yoy): -44.50%
Operating Cash Flow (ttm): 317.14M
52-Week High (01-May-06): 51.97
52-Week Low (23-Feb-07): 15.50
Shares Short (as of 09-Jan-07): 12.79M
Major institutional holders (as of Dec. 31, 2006)include:
Morgan Stanley, Goldman Sachs, State Street, New York State Teachers Retirement System, Citi Group, Barclay Global Investors.
The official stated book value, as of the most recent quarter, was $37.30. I have applied the following adjustments: writedown from default mortgages $5. Moreover, after writing down all the residual interest of $2 makes adjusted b.v. $25 even. Then, Subtracting the $1.90 dividend paid in Q4 equals final b.v. of $23/share.
Chart analysis:
1.NEW versus NGX (Philadelphia Housing Index)
stockcharts.com
2. NEW's Weekly Chart
stockcharts.com
Conclusion:
In spite of prevailing negative comments about the sub-prime mortgage industry, the housing industry has not collapsed. I
believe that there are diamonds in the rubbles for the contrarian investors in the mortgage lending industry.
pcyhuang |
