NYSE:RC

Stock Analysis Report

Executive Summary

Ready Capital Corporation operates as a real estate finance company in the United States.

Rewards

Trading at 49.4% below its fair value

Earnings are forecast to grow 9.3% per year

Risk Analysis

Dividend of 9.71% is not well covered by earnings or forecast to be in the next 3 years

Large one-off items impacting financial results

Shareholders have been diluted in the past year



Snowflake Analysis

Undervalued with limited growth.


Similar Companies

Share Price & News

How has Ready Capital's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: RC has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

1.0%

RC

1.9%

US Mortgage REITs

1.5%

US Market


1 Year Return

1.7%

RC

7.2%

US Mortgage REITs

20.1%

US Market

Return vs Industry: RC underperformed the US Mortgage REITs industry which returned 7.2% over the past year.

Return vs Market: RC underperformed the US Market which returned 20.1% over the past year.


Shareholder returns

RCIndustryMarket
7 Day1.0%1.9%1.5%
30 Day3.1%4.0%1.4%
90 Day5.7%9.1%8.7%
1 Year12.8%1.7%19.0%7.2%22.7%20.1%
3 Year63.7%20.7%46.1%5.6%50.1%40.5%
5 Yearn/a74.0%-0.1%73.1%54.1%

Price Volatility Vs. Market

How volatile is Ready Capital's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Ready Capital undervalued compared to its fair value and its price relative to the market?

49.4%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: RC ($16.48) is trading below our estimate of fair value ($32.59)

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


Price To Earnings Ratio

PE vs Industry: RC is good value based on its PE Ratio (10.3x) compared to the Mortgage REITs industry average (13.1x).

PE vs Market: RC is good value based on its PE Ratio (10.3x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: RC is poor value based on its PEG Ratio (1.1x)


Price to Book Ratio

PB vs Industry: RC is good value based on its PB Ratio (1x) compared to the US Mortgage REITs industry average (1x).


Next Steps

Future Growth

How is Ready Capital forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

9.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: RC's forecast earnings growth (9.3% per year) is above the savings rate (1.7%).

Earnings vs Market: RC's earnings (9.3% per year) are forecast to grow slower than the US market (14.5% per year).

High Growth Earnings: RC's earnings are forecast to grow, but not significantly.

Revenue vs Market: RC's revenue (12.3% per year) is forecast to grow faster than the US market (7.6% per year).

High Growth Revenue: RC's revenue (12.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: RC's Return on Equity is forecast to be low in 3 years time (10.6%).


Next Steps

Past Performance

How has Ready Capital performed over the past 5 years?

14.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: RC has a large one-off gain of $24.4M impacting its September 30 2019 financial results.

Growing Profit Margin: RC's current net profit margins (31.9%) are higher than last year (23%).


Past Earnings Growth Analysis

Earnings Trend: RC's earnings have grown by 14.9% per year over the past 5 years.

Accelerating Growth: RC's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: RC had negative earnings growth (-0.9%) over the past year, making it difficult to compare to the Mortgage REITs industry average (7.3%).


Return on Equity

High ROE: RC's Return on Equity (8.6%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Ready Capital'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

Inventory Level: RC has a low level of unsold assets or inventory.

Debt Coverage by Assets: RC's debt is covered by short term assets (assets are 1.2x debt).


Financial Institutions Analysis

Asset Level: RC's level of assets compared to its equity is low.

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

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

Loan Level: Insufficient data to determine if RC has an acceptable proportion of non-loan assets held.

Low Risk Deposits: RC has advanced significantly more loans than the customer deposits it holds.

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


Next Steps

Dividend

What is Ready Capital's current dividend yield, its reliability and sustainability?

9.71%

Current Dividend Yield


Dividend Yield vs Market

company9.7%marketbottom25%1.4%markettop25%3.7%industryaverage9.3%forecastin3Years9.8%

Current dividend yield vs market & industry

Notable Dividend: RC's dividend (9.71%) is higher than the bottom 25% of dividend payers in the US market (1.44%).

High Dividend: RC's dividend (9.71%) is in the top 25% of dividend payers in the US market (3.69%)


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, RC has been paying a dividend for less than 10 years.

Growing Dividend: RC has only been paying a dividend for 3 years, and since then payments have fallen.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (100.1%), RC's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: RC's dividends in 3 years are not forecast to be well covered by earnings (98.4% payout ratio).


Next Steps

Management

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

2.1yrs

Average management tenure


CEO

Tom Capasse (62yo)

3.3yrs

Tenure

0

Mr. Thomas Edward Capasse, also known as Tom, is a Manager and Co-Founder of Waterfall Asset Management, LLC (“Manager”). Mr. Capasse also serves as Chairman of board of directors and Chief Executive Offic ...


Leadership Team

NamePositionTenureCompensationOwnership
Thomas Capasse
Chairman & CEO3.3yrsno data0.52% $4.6m
Jack Ross
President & Director3.3yrsno data0.50% $4.3m
Andrew Ahlborn
CFO & Secretary0.7yrsno data0.018% $156.2k
Gary Taylor
Chief Operating Officer0.8yrsno datano data
Thomas Buttacavoli
Chief Investment Officer0yrsno data0.14% $1.3m
Brian Dunn
Director of Finance Division0yrsno datano data

2.1yrs

Average Tenure

60.5yo

Average Age

Experienced Management: RC's management team is considered experienced (2.1 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Thomas Capasse
Chairman & CEO3.3yrsno data0.52% $4.6m
Jack Ross
President & Director3.3yrsno data0.50% $4.3m
J. Reese
Independent Director3.3yrsUS$155.00k0.069% $602.0k
Frank Filipps
Independent Director3.3yrsUS$165.00k0.040% $349.4k
Todd Sinai
Independent Director3.3yrsUS$152.50k0.039% $341.0k
David Holman
Independent Director4.9yrsUS$155.00k0.040% $349.4k
Gilbert Nathan
Independent Director0.9yrsno data0.0078% $68.3k

3.3yrs

Average Tenure

62yo

Average Age

Experienced Board: RC's board of directors are considered experienced (3.3 years average tenure).


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.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 19.8%.


Top Shareholders

Company Information

Ready Capital Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Ready Capital Corporation
  • Ticker: RC
  • Exchange: NYSE
  • Founded: 2007
  • Industry: Mortgage REITs
  • Sector: Diversified Financials
  • Implied Market Cap: US$875.336m
  • Market Cap: US$856.925m
  • Shares outstanding: 53.12m
  • Website: https://www.readycapital.com

Number of Employees


Location

  • Ready Capital Corporation
  • 1140 Avenue of the Americas
  • 7th Floor
  • New York
  • New York
  • 10036
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
RCNYSE (New York Stock Exchange)YesCommon StockUSUSDNov 2016
A2ATTTDB (Deutsche Boerse AG)YesCommon StockDEEURNov 2016
0SZMUN (Boerse Muenchen)YesCommon StockDEEURNov 2016

Biography

Ready Capital Corporation operates as a real estate finance company in the United States. The company originates, acquires, finances, and services small balance commercial (SBC) loans, small business administration (SBA) loans, and residential mortgage loans, as well as mortgage backed securities collateralized primarily by SBC loans, or other real estate-related investments. It operates through four segments: Loan Acquisitions; SBC Originations; SBA Originations, Acquisitions and Servicing; and Residential Mortgage Banking. The Loan Acquisitions segment acquires performing and non-performing SBC loans. The SBC Originations segment originates SBC loans secured by stabilized or transitional investor properties using various loan origination channels; and originates and services multi-family loan products. The SBA Originations, Acquisitions and Servicing segment acquires, originates, and services owner-occupied loans guaranteed by the SBA. The Residential Mortgage Banking segment originates residential mortgage loans through retail, correspondent, and broker channels. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Sutherland Asset Management Corporation and changed its name to Ready Capital Corporation in September 2018. Ready Capital Corporation was founded in 2007 and is headquartered in New York, New York. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/17 01:29
End of Day Share Price2020/02/14 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.