Regulatory headwinds could impact mortgage activity in 2013. The mortgage rules have made it more difficult for people with average credit to qualify for mortgages. Most forecasters predict a decline of 10%-30% in mortgage origninations next year as a result.
Rising average order size and market share gains are likely to sustain growth at a superior level. Contributions from the large banks could provide a little kick. We estimate income will rise 23% to $.80 a share on a 30% increase in sales. More shares outstanding will offset the likely improvement in margins. The long term outlook remains bright. Ellie Mae basically has no competition and it participates in a gigantic market that is in an early stage of recovering. In 3-5 years earnings could reach $1.50-$2.50 a share.
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