PHH profits are lower than expected

February 23, 1994|By Timothy J. Mullaney | Timothy J. Mullaney,Sun Staff Writer

PHH Corp. announced yesterday a 7 percent increase in third-quarter profits, slightly lower than Wall Street expectations.

The Hunt Valley-based company, which provides mortgage banking, vehicle leasing and relocation services, said it earned $15.4 million, or 87 cents a share, during the quarter ended Jan. 31, up from $14.4 million in the same quarter of fiscal 1993.

Stock traders responded by pushing PHH shares down 62.5 cents to close at $39.125 a share. Analysts at two Baltimore brokerages said the earnings were slightly below estimates that PHH would earn 89 cents a share.

"It's not enough to sweat over," said Alex Hart, who follows the company for Ferris Baker Watts Inc. of Baltimore. Mr. Hart said PHH's mortgage banking and vehicle leasing businesses did well, while earnings from the relocation business were off about 20 percent because of the soft economy.

"The traditional business of moving people for IBM is kind of dragging it," Mr. Hart said. "It's in the neighborhood of $60,000 to move someone, start to finish" and companies that have just completed restructurings or layoffs are wary of spending the money, he said.

Kevin O'Brien of Baltimore-based Alex. Brown Inc. said that profits at the mortgage banking division grew about 25 percent, driven by refinancings and a large mortgage servicing portfolio. Mr. Hart added that PHH was getting more new-loan origination by marketing through affinity groups, in a method similar to those pioneered by credit card companies.

Mr. O'Brien said Alex. Brown expects the company to earn $3.65 a share for the year ending in April, up from $3.25 in 1993.

PHH Corp.

.. .. .. .. .. .. .. .. ..Ticker .. .. .. .. .. .Yesterday's

.. .. .. .. .. .. .. .. ..Symbol .. .. ..Cls... .. .. ..Chg.

.. .. .. .. .. .. .. .. .. PHH .. .. .. .39 1/8 .. .. .. .. ..- 5/8

Period ended

1/31/94 .. .. .. .. .. ..3rd qtr. .. ..Year ago .. .. .Chg.

Revenue .. .. .. .. .. .$516,809 .. ...$488,518 .. ...+5.8%

Net Income .. .. .. .. ..$15,411 .. .. .$14,398 .. ...+7.0%

Primary EPS .. .. .. .. ...$0.87 .. .. ...$0.83 .. ...+4.8%

.. .. .. .. .. .. .. .. . .9 mos. .. ...Year ago .. ...Chg.

Revenue .. .. .. .. .. .$1,600,753 .. .$1,505,841 .. .+6.3%

Net Income .. .. .. .. .. .$46,403 .. .. .$39,794 ...+16.6%

Primary EPS .. .. .. .. .. ..$2.61 .. .. ...$2.30 ...+13.5%

Figures in thousands (except per share data).

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