Onity Group (ONIT) shares soared 12.2% in the last trading session to close at $34.49. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 7.4% loss over the past four weeks.

Onity Group witnessed a strong price increase driven by the company’s preliminary update on its financial and operating performance for the first quarter of 2025, announced on March 20, 2025.

Per the preliminary update, Onity Group observed a significant increase in originations volume in the first quarter of 2025 comapred to the year-ago period, thanks to improved channels and a well-received closed-end second originations product (launched in February 2025). The company also mentioned that effective hedging strategies have contributed to consistent net income and GAAP return on equity (ROE) results, and there is potential for releasing some or all of the valuation allowance against its $180 million net U.S. deferred tax asset by year-end 2025. 

This mortgage servicer is expected to post quarterly earnings of $1.90 per share in its upcoming report, which represents a year-over-year change of +9.2%. Revenues are expected to be $259.96 million, up 8.7% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Onity, the consensus EPS estimate for the quarter has been revised 20.3% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on ONIT going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Onity is part of the Zacks Financial - Mortgage & Related Services industry. Essent Group (ESNT), another stock in the same industry, closed the last trading session 0.8% higher at $55.85. ESNT has returned -0.8% in the past month.

For Essent Group , the consensus EPS estimate for the upcoming report has changed -5.3% over the past month to $1.66. This represents a change of -2.4% from what the company reported a year ago. Essent Group currently has a Zacks Rank of #3 (Hold).

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This article originally published on Zacks Investment Research (zacks.com).

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