Ellie May (NASDAQ: ELLI) Rising with the Housing Market

Elle May (NASADAQ ELLI), Rising with the Housing Market

Elle May (NASADAQ ELLI), Rising with the Housing Market

The housing market has been called the weakest link in the US economy. However, movement in housing prices over the last few months along with rising customers’ interest in buying new homes have caused many to have renewed hope and belief that the housing crisis has reached its low. As the housing market makes a comeback, a number of companies are perfectly positioned to reap the benefits. Not only are the companies expanding, their comparable net sales are rising by double digits, and some of the companies have raised their guidance profits. I believe the stocks are showing great promise and betray no sign of slowing down in the next few years. Here is a company that is widely praised as a hot prospect for further expansion as the housing sector rebounds.

Ellie Mae (NADAQ: ELLI) is a provider of in-demand automation solutions for the mortgage sector. Apart from also providing data and detailed insight into the business, it also offers effective and comprehensive  end-to-end solutions, delivered by using a software-as-service model serving as the core operating system for mortgage originators and spans customer relations, loan origination, business management, and other relevant areas. Founded in 1997 and based in Pleasanton, California, it was recently voted third in a list of 40 best performing Russell 3,000 stocks year to date. While I think its great that Ellie Mae’s solutions are beloved by the mortgage sector, that’s not what gets me excited about the stock. Ellie Mae is also in the new line of providing core operating systems for the sector. What does pique my interest also are its software lines: Encompass, Encompass 360, and DataTrac  Management software solutions.

In addition to giving insight to professionals in the mortgage industry, Ellie Mae is also host to the Ellie Mae Network, which allows Encompass users to electronically conduct business transactions with lenders and settlement service providers they work with to process and fund loans. Nearly 1,200 clients, partners, and mortgage industry professionals came to its National User Summit. 20% of all mortgage originators in the United States flow through its Encompass 360 mortgage management software and Ellie Mae Network.

With the housing sector still at such a comparatively early stage in its recovery, this is perhaps the time investors must think of the best play on the rebound of real estate. Ellie Mae turned in third-quarter earnings recently that were up 289%, nearly twice what analysts had forecast. Its revenue growth of 87% also soared past projections to end at $27.5 million, compared to $14.7 million in the third quarter of 2011. Net income for the third quarter 2012 was $6.8 million, or $0.25 per diluted shares, or compared to net income of $2.7, or $0.12 per diluted share, in the third quarter of 2011.

The company is going to be a major player in the mortgage industry in the coming years. The decision as to whether to trade in the housing sector in the first place rests with the individual trader, and depending on the strategy, Ellie Mae can prove a profitable venture. 

Related News

  • mrgambale@gmail.com

    Interesting company and very dependent on the housing market. Housing has been a bright spot the economy as most other sectors seem to be slowing. I am concerned that the housing market may just linger along the bottom due to tight lending and a much more regulated mortgage industry.

  • meikoacebo

    I would say invest now when the housing market is slowly recovery as valuations appear cheap. As from the old adage, buy when there’s blood on the street.

  • mrego123

    It just seems to me that the upside potential is greater in the builders and REITs. I would stick with those instead of going with risky mortgage houses.

  • mrgambale@gmail.com

    I agree, I like the builders as more of a pure play on housing. The Mortgage business has changed so much and without an ease in lending standards many people will continue to have a difficult time being approved for credit.

  • samanthapl

    For those who don’t have trouble obtaining credit, however, investing into the housing market directly right now is a prime choice. The timing is perfect to uy low, sell high later. Very soon that ship will have sailed.

    • Tyokunbo

      The housing market is slowly recovering. Investing into it directly right now is a good move.

  • Pingback: eset nod