Rocket Companies (NYSE:RKT) - Stock price, News & Analysis

RKT fundamental analysis
Snowflake Score
Valuation	2/6
Future Growth	1/6
Past Performance	4/6
Financial Health	1/6
Dividends	0/6

RKT Stock Overview

Rocket Companies, Inc. engages in the tech-driven real estate, mortgage, and eCommerce businesses in the United States and Canada.

Rewards

Trading at 56.4% below our estimate of its fair value

Earnings grew by 591.4% over the past year

Risk Analysis

Earnings are forecast to decline by an average of 20.9% per year for the next 3 years

Rocket Companies Competitors

PennyMac Financial Services

NYSE:PFSI

US$3.8b

Mr. Cooper Group

NasdaqCM:COOP

US$3.2b

Flagstar Bancorp

NYSE:FBC

US$2.5b

Ocwen Financial

NYSE:OCN

US$347.2m

Price History & Performance

Summary of all time highs, changes and price drops for Rocket Companies
Historical stock prices
Current Share Price	US$12.92
52 Week High	US$43.00
52 Week Low	US$12.62
Beta	0
1 Month Change	-14.55%
3 Month Change	-21.74%
1 Year Change	-35.56%
3 Year Change	n/a
5 Year Change	n/a
Change since IPO	-39.93%

Recent News & Updates

Dec 23

Rocket Companies Focuses On Revenue Diversification

Rocket Companies went public in August 2020, raising $1.8 billion in gross proceeds in a U.S. IPO. The firm provides a range of mortgage, auto and consumer loan financial services in the United States. RKT has seen topline revenue contraction after enormous growth in 2020. While management seeks to ramp up its revenue stream diversification, it will take time, so my outlook on RKT at around $15.25 is neutral.

Nov 08

Rocket Companies: Uncertainties In Revenue Growth

The latest Sept-2021 quarterly report suggests revenue trends are uncertain, while the 2022 revenue forecast indicates a decline. RKT’s revenue and profit realization lags the enormous industry potential despite intense marketing investments. While the valuation is undemanding, RKT risks being a value trap.

Aug 18

Rocket Companies - Not Rocking, But Good Enough

Rocket Companies has seen a huge boom and bust cycle over the past year. While the company is currently seeing a bust, or at least difficult times, as the guidance implies that earnings are no longer falling. This condition, the long term secular tailwinds and low valuations from the start, make me still upbeat here in the long haul.

Shareholder Returns

	RKT	US Mortgage	US Market
7D	-3.7%	-5.8%	-6.1%
1Y	-35.6%	-12.6%	4.2%

Return vs Industry: RKT underperformed the US Mortgage industry which returned -11.8% over the past year.

Return vs Market: RKT underperformed the US Market which returned 6.6% over the past year.

Price Volatility

Is RKT's price volatile compared to industry and market?
RKT volatility
RKT Average Weekly Movement	5.6%
Mortgage Industry Average Movement	3.7%
Market Average Movement	6.7%
10% most volatile stocks in US Market	15.6%
10% least volatile stocks in US Market	2.4%

Stable Share Price: RKT is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: RKT's weekly volatility has decreased from 13% to 6% over the past year.

About the Company

Founded	Employees	CEO	Website
1985	24,000	Jay Farner	https://www.rocketcompanies.com

Rocket Companies, Inc. engages in the tech-driven real estate, mortgage, and eCommerce businesses in the United States and Canada. It operates in two segments, Direct to Consumer and Partner Network. The company’s solutions include Rocket Mortgage, a mortgage lender; Amrock that provides title insurance, property valuation, and settlement services; Rocket Homes, a home search platform and real estate agent referral network, which offers technology-enabled services to support the home buying and selling experience; Rocket Auto, an automotive retail marketplace that provides centralized and virtual car sales support to national car rental and online car purchasing platforms; and Rocket Loans, an online-based personal loans business.

Rocket Companies Fundamentals Summary

How do Rocket Companies's earnings and revenue compare to its market cap?
RKT fundamental statistics
Market Cap	US$25.98b
Earnings (TTM)	US$400.35m
Revenue (TTM)	US$15.38b

64.0x

P/E Ratio

36.4x

P/B Ratio

Is RKT overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
RKT income statement (TTM)
Revenue	US$15.38b
Cost of Revenue	US$0
Gross Profit	US$15.38b
Expenses	US$14.97b
Earnings	US$400.35m

Last Reported Earnings

Sep 30, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	0.20
Gross Margin	100.00%
Net Profit Margin	2.60%
Debt/Equity Ratio	263.7%

How did RKT perform over the long term?

See historical performance and comparison

Valuation

Is Rocket Companies undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value

Share Price vs. Fair Value

Below Fair Value: RKT ($12.92) is trading below our estimate of fair value ($29.63)

Significantly Below Fair Value: RKT is trading below fair value by more than 20%.

Price To Earnings Ratio

PE vs Industry: RKT is poor value based on its PE Ratio (64x) compared to the US Mortgage industry average (12.6x).

PE vs Market: RKT is poor value based on its PE Ratio (64x) compared to the US market (16.7x).

Price to Earnings Growth Ratio

PEG Ratio: RKT's earnings are forecast to decline next year, so we can't calculate its PEG ratio.

Price to Book Ratio

PB vs Industry: RKT is overvalued based on its PB Ratio (36.4x) compared to the US Mortgage industry average (1x).

Future Growth

How is Rocket Companies forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

-20.9%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: RKT's earnings are forecast to decline over the next 3 years (-20.9% per year).

Earnings vs Market: RKT's earnings are forecast to decline over the next 3 years (-20.9% per year).

High Growth Earnings: RKT's earnings are forecast to decline over the next 3 years.

Revenue vs Market: RKT's revenue is expected to decline over the next 3 years (-11.2% per year).

High Growth Revenue: RKT's revenue is forecast to decline over the next 3 years (-11.2% per year).

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: RKT's Return on Equity is forecast to be high in 3 years time (24.7%)

Past Performance

How has Rocket Companies performed over the past 5 years?

-17.6%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: RKT has high quality earnings.

Growing Profit Margin: RKT's current net profit margins (2.6%) are higher than last year (0.4%).

Past Earnings Growth Analysis

Earnings Trend: RKT's earnings have declined by 17.6% per year over the past 5 years.

Accelerating Growth: RKT's earnings growth over the past year (591.4%) exceeds its 5-year average (-17.6% per year).

Earnings vs Industry: RKT earnings growth over the past year (591.4%) exceeded the Mortgage industry 32.1%.

Return on Equity

High ROE: Whilst RKT's Return on Equity (87.61%) is outstanding, this metric is skewed due to their high level of debt.

Financial Health

How is Rocket Companies's financial position? (This company is analysed differently as a bank or financial institution)

Financial Position Analysis

Debt to Equity History and Analysis

Balance Sheet

Financial Institutions Analysis

Asset Level: RKT's Assets to Equity ratio (3.9x) is low.

Allowance for Bad Loans: Insufficient data to determine if RKT has a sufficient allowance for bad loans.

Low Risk Liabilities: RKT reports no customer deposits, 100% of its liabilities are made up of higher risk sources of funding.

Loan Level: Insufficient data to determine if RKT has an appropriate level of Loans to Assets ratio.

Low Risk Deposits: RKT reports no customer deposits, loans are made up entirely of externally borrowed funds.

Level of Bad Loans: Insufficient data to determine if RKT has an appropriate level of bad loans.

Dividend

What is Rocket Companies's current dividend yield, its reliability and sustainability?

Dividend Yield vs Market

Notable Dividend: Unable to evaluate RKT's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate RKT's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if RKT's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if RKT's dividend payments have been increasing.

Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.

Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of RKT's dividend in 3 years as they are not forecast to pay a notable one for the US market.

Next Steps

Explore strong dividend paying companies in the Banks industry.

Management

How experienced are the management team and are they aligned to shareholders interests?

1.8yrs

Average management tenure

CEO

Jay Farner (47 yo)

1.83yrs

Tenure

US$11,728,067

Compensation

Mr. Jay D. Farner serves as Vice Chairman and Chief Executive Officer of Rocket Companies (NYSE: RKT). He was Chief Executive Officer of Rocket Mortgage, LLC. Prior to becoming the CEO of Rocket Mortgage,...

CEO Compensation Analysis

Compensation vs Market: Insufficient data to establish whether Jay's total compensation is reasonable compared to companies of similar size in the US market.

Compensation vs Earnings: Insufficient data to compare Jay's compensation with company performance.

Leadership Team

Experienced Management: RKT's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.

Board Members

Experienced Board: RKT's board of directors are not considered experienced ( 1.8 years average tenure), which suggests a new board.

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/01/21 23:58
End of Day Share Price	2022/01/21 00:00
Earnings	2021/09/30
Annual Earnings	2020/12/31