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Reasons to Retain CoreLogic (CLGX) Amid Coronavirus Crisis

Consulting firm CoreLogic, Inc. CLGX has deployed business-continuity plans in a bid to lower the COVID-19 pandemic’s impact on its business. The stock has performed well in the past year, gaining 20% and outperforming the 7.5% rally of the industry it belongs to.

Factors Supporting the Rally

CoreLogic continues to be a robust partner to government agencies, financial institutions, insurance carriers, real estate professionals and other housing market participants by virtue of its scale and financial strength, operational efficiency and data-driven solutions.

The company’s core mortgage operations remain in good shape backed by client gains across flood, mortgage credit, tax servicing, collateral valuations, and Appraisal Management Company (AMC) service.

On the non-mortgage font, share gains and in-flight investments in innovative capabilities in property marketing solutions, insurance and spatial platforms, visual imagery and valuation models are expected to boost revenues in the upcoming quarters.

CoreLogic has actuated business-continuity plans to sail through the coronavirus-induced uncertain times. These include deploying crisis management teams, augmenting facility management protocols, making adjustments in technology and data operations, and securing its supply chain. The company has shifted almost 95% of the workforce to the work-from-home system to sustain its business amid the pandemic.

Some Risks

CoreLogic has a debt-laden balance sheet. Total debt at the end of first-quarter 2020 was $1.67 billion, in line with the prior quarter. The debt-to-capital ratio of 0.64 is higher than the industry’s 0.20 and the previous quarter’s 0.63. An increase in the debt to capitalization ratio indicates a higher risk of insolvency during challenging times.

Further, the company’s cash and cash equivalent of $153 million at the end of the first quarter was well below this debt level, underscoring that it doesn’t have enough cash to meet the debt burden.

Zacks Rank and Stocks to Consider

CoreLogic currently carries a Zacks Rank # 3 (Hold).  

A few better-ranked stocks in the broader Zacks Business Services sector are H&R Block HRB, SPS Commerce SPSC and SailPoint Technologies SAIL. All three stocks carry a Zacks Rank #2 (Buy) currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term expected earnings per share (three to five years) growth rate for H&R Block, SPS Commerce and SailPoint is 12%, 15% and 15% respectively.

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