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Rocket Companies Inc Ordinary Shares Class A RKT

Morningstar Rating
$12.87 +0.31 (2.47%)
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Company Report

Rocket Companies Earnings: Better-Than-Expected Results but High Mortgage Rates Remain a Issue

Narrow-moat-rated Rocket Companies reported better fourth-quarter results than we had expected, though the company continues to be affected by difficult mortgage market conditions industrywide. Revenue increased 44% from last year to $694 million, or $885 million when adjusted for a negative $191 million valuation change for the company’s mortgage servicing rights portfolio. Despite the recovery in revenue, the company still reported a net adjusted loss of $6 million, though this is a significant improvement from the $197 million loss last year. As we incorporate these results, we do not plan to materially alter our $13 fair value estimate for Rocket. We see the shares as undervalued on a full-cycle value, though we caution investors that near-term results will likely remain weak until mortgage market conditions improve.

Price vs Fair Value

RKT is trading within a range we consider fairly valued.
Price
$12.87
Fair Value
$54.00
Uncertainty
Very High
1-Star Price
$15.78
5-Star Price
$8.30
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Rocket's scale and financial resources leaves its well equipped to weather the difficult operating climate facing mortgage lenders.

Bears

Mortgage origination remains highly volatile. Rocket’s results can vary substantially from year to year based on macroeconomic factors outside of its control.

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News

Trading Information

Previous Close Price
$12.56
Day Range
$12.2212.88
52-Week Range
$7.1715.19
Bid/Ask
$12.75 / $12.84
Market Cap
$1.72 Bil
Volume/Avg
2.2 Mil / 3.1 Mil

Key Statistics

Price/Earnings (Normalized)
Price/Sales
6.99
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield

Company Profile

Rocket Companies is a financial services company that was originally founded as Rock Financial in 1985 and is currently based in Detroit. Rocket Companies offers a wide array of services and products but is best known for its Rocket Mortgage business. The company’s mortgage lending operations are split between its direct-to-consumer lending, which sees borrowers accessing the company’s lending arm directly through either its mobile app or website, and its partner network where mortgage brokers and other firms use Rocket’s origination process to offer loans to their customers. The company has rapidly gained market share in recent years and is now the largest mortgage originator in the U.S. as well as the servicer for more than 2 million loans.
Sector
Financial Services
Industry
Mortgage Finance
Stock Style Box
Small Value
Total Number of Employees
14,700

Competitors

Valuation

Metric
RKT
SOFI
DFS
Price/Earnings (Normalized)
10.74
Price/Book Value
2.801.682.19
Price/Sales
6.994.031.93
Price/Cash Flow
89.903.62
Price/Earnings
RKT
SOFI
DFS

Financial Strength

Metric
RKT
SOFI
DFS
Quick Ratio
Current Ratio
Interest Coverage
Quick Ratio
No chart available

Profitability

Metric
RKT
SOFI
DFS
Return on Assets (Normalized)
−0.70%−0.21%2.12%
Return on Equity (Normalized)
−24.01%−1.03%22.27%
Return on Invested Capital (Normalized)
Return on Assets
RKT
SOFI
DFS
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