Rocket Earnings: Margins Improve, but Volume Remains Low

Narrow-moat-rated Rocket reported decent first-quarter earnings that were better than we had expected, though its results remained pressured by a weak mortgage market. Adjusted net revenue increased 31.9% from last year to $1.16 billion, while adjusted earnings per share increased to $0.04 from a loss of $0.06 last year. While these results were better than we had anticipated, a more meaningful recovery for Rocket will require better mortgage origination conditions, the timing of which remains uncertain. As we incorporate these results, we do not plan to materially alter our $13.50 fair value estimate, and shares trade in fairly valued territory.