Scopia Capital Has Almost 10% of PHH Corp

The best peers for the company are ORIX Corporation (NYSE:IX), CIT Group Inc. (NYSE:CIT), and CapitalSource, Inc. (NYSE:CSE); Bank of America Corp (NYSE:BAC) is also a competitor, though that company also has other operations. In terms of earnings multiples, the latter three all trade at 12 to 13 times consensus earnings for 2013; the forward P/E for Orix, based on the fiscal year ending in March 2014, is 7. So in general PHH is priced at a discount relative to comparable companies. Short sellers aren’t nearly as aggressive on these companies as they are at PHH, however, and that company doesn’t look too attractive when we look at price/book ratios.

We don’t think that investors should be buying PHH- at least not yet. It’s possible that the next few quarters will turn out well, in which case it might be worth looking into if the company might hit its earnings targets, but for now we think there is too much risk for too little reward and a number of traders are short the stock. PHH does not look particularly good compared to its peers either.

Disclosure: I do not own any stocks mentioned in this article.