HomeStreet Stock Has Small-Cap Value and Big-Time Potential

HMST is slated to report earnings on April 26

Apr 22, 2021 at 11:12 AM
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HomeStreet, Inc. (NASDAQ:HMST) is a financial services company headquartered in Seattle, Washington, serving consumers and businesses in the western United States and Hawaii through its various operating subsidiaries. The company is principally engaged in real estate lending, including mortgage banking activities, and commercial and consumer banking.

HMST has increased 92% year-over-year and 116% since bottoming at a May low of $19.46. Additionally, shares of HomeStreet stock are up about 25% year-to-date. However, HomeStreet stock has fallen 20% from its record high of $52.46 . This afternoon, HMST is trading down 1.2% at $41.69.

HomeStreet is scheduled to report their quarterly earnings results after the market closes on Monday, April 26. HMST has outperformed expectations on three out of the last four quarterly earnings reports. For the first quarter of 2020, HomeStreet missed analyst estimates by a margin of $0.01 and reported an earnings per share (EPS) of $0.30. For the second quarter of 2020, HMST bumped its eps up to $0.81, beating expectations by a margin of $0.50. For the third quarter of 2020, HomeStreet reported another increase in earnings, rising to $1.15 per share and beating estimates by a margin of $0.32. In the most recent quarterly report, HomeStreet posted an EPS of $1.25 and beat expectations by a margin of $0.18.

From a fundamental perspective, HMST is not the safest stock play available on the market, especially for a company in the finance sector, but it is intriguing as a value/recovery play. HomeStreet stock currently trades at a low price-earnings ratio of 12.48, which is impressive given how much the company has improved on the bottom-line over the past year.

Overall, it is entirely possible for HomeStreet stock to continue falling in the short-term, opening up a great potential opportunity for investors to buy at a discount. Nonetheless, considering potential gains from stock appreciation and dividends, HomeStreet stock already offers a promising value after its recent dip.

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