Countrywide Shares Jump Amid Buyout Talk

Is Countrywide Credit Industries on the auction block?

Shares of the Calabasas-based company, the largest publicly traded U.S. mortgage lender, on Wednesday jumped $2.06 to close at $34.06 on the New York Stock Exchange after CNBC reported that the firm has hired Goldman Sachs to line up potential buyers.

Countrywide (ticker symbol: CCR) declined to comment.

Chief Executive Angelo Mozilo, 61, who co-founded Countrywide 31 years ago, said in May that staying independent was no longer a sacred tenet, raising buyout speculation.

“It’s an attractive company from a consolidation standpoint,” said Thomas O’Donnell, an analyst at Salomon Smith Barney, who values the company at $45 to $50 a share.

At the current stock price the company’s market capitalization is about $4 billion.

Though the stock has rebounded from its multiyear low of $22.31 in March, it’s still priced at just 11 times the $3.17 a share analysts on average expect the company to earn this year.

The stock price has tumbled from more than $55 a share in 1998 as interest rates have risen, finally slowing the housing market this year.

Last month Countrywide said fiscal first-quarter earnings fell 19% to $83.5 million, or 72 cents a share, as higher interest rates kept consumers from refinancing their home loans.

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Countrywide’s Crumpled Stock

Shares of major mortgage financier Countrywide Credit (ticker symbol: CCR) have rebounded recently but remain far below their peak in 1998. Monthly closes and latest:

Wednesday: $34.06, up $2.06

Source: Bloomberg News