Ready Capital (NYSE:RC) - Share price, News & Analysis

RC fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	2/6
Past Performance	5/6
Financial Health	2/6
Dividends	3/6

RC Stock Overview

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

Rewards

Trading at 23.7% below our estimate of its fair value

Earnings are forecast to grow 2.1% per year

Earnings grew by 42% over the past year

Risk Analysis

Debt is not well covered by operating cash flow

Shareholders have been substantially diluted in the past year

Dividend of 11.58% is not well covered by earnings

Ready Capital Competitors

Annaly Capital Management

NYSE:NLY

US$10.1b

Starwood Property Trust

NYSE:STWD

US$7.1b

AGNC Investment

NasdaqGS:AGNC

US$6.2b

Blackstone Mortgage Trust

NYSE:BXMT

US$5.2b

Price History & Performance

Summary of all time highs, changes and price drops for Ready Capital
Historical stock prices
Current Share Price	US$14.51
52 Week High	US$16.78
52 Week Low	US$13.24
Beta	1.08
1 Month Change	-4.29%
3 Month Change	0.83%
1 Year Change	-0.21%
3 Year Change	-0.68%
5 Year Change	-2.62%
Change since IPO	14.08%

Recent News & Updates

Apr 04

Ready Capital: Headwinds From Rising Interest Rates

Ready Capital's short term performance is likely to be stressed amid rising interest rates. The company has a higher than average dividend yield, but distribution growth is extremely volatile. The annual EPS growth for 2022 is expected to remain flat amid quantitative tightening and economic rebound. I am neutral on the stock because even though it is a good income generator, the non-existent dividend growth history fails to shield investors against inflationary pressures.

Jan 16

Trade Orchid Island Capital For Ready Capital To Realize Future Growth And Income

Orchid Island Capital is losing book value, suffering from margin compression, and recently cut the dividend to reduce expenses. The outlook for ORC is not optimistic given the triple threat posed by the Fed of higher rates, easing bond purchases, and an expected reduction in assets. A better option might be Ready Capital, with a 10.8% yield and a stronger financial position going into 2022.

Shareholder Returns

	RC	US Mortgage REITs	US Market
7D	3.6%	0.3%	0.5%
1Y	-0.2%	-20.8%	-11.5%

Return vs Industry: RC exceeded the US Mortgage REITs industry which returned -18.5% over the past year.

Return vs Market: RC exceeded the US Market which returned -8.1% over the past year.

Price Volatility

Is RC's price volatile compared to industry and market?
RC volatility
RC Average Weekly Movement	4.1%
Mortgage REITs Industry Average Movement	4.4%
Market Average Movement	7.9%
10% most volatile stocks in US Market	17.0%
10% least volatile stocks in US Market	3.0%

Stable Share Price: RC is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: RC's weekly volatility (4%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2007	630	Tom Capasse	https://www.readycapital.com

Ready Capital Corporation operates as a real estate finance company in the United States. The company acquires, originates, manages, services, and finances small to medium balance commercial (SBC) loans, small business administration (SBA) loans, residential mortgage loans, and mortgage backed securities collateralized primarily by SBC loans, or other real estate-related investments. It operates through three segments: SBC Lending and Acquisitions; Small Business Lending; and Residential Mortgage Banking.

Ready Capital Fundamentals Summary

How do Ready Capital's earnings and revenue compare to its market cap?
RC fundamental statistics
Market Cap	US$1.69b
Earnings (TTM)	US$172.88m
Revenue (TTM)	US$558.08m

9.7x

P/E Ratio

3.0x

P/S Ratio

Is RC overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
RC income statement (TTM)
Revenue	US$558.08m
Cost of Revenue	US$93.43m
Gross Profit	US$464.65m
Other Expenses	US$291.78m
Earnings	US$172.88m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	1.51
Gross Margin	83.26%
Net Profit Margin	30.98%
Debt/Equity Ratio	465.4%

How did RC perform over the long term?

See historical performance and comparison

Dividends

11.6%

Current Dividend Yield

74%

Payout Ratio

Valuation

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

Valuation Score

4/6

Valuation Score 4/6

Below Fair Value
Significantly Below Fair Value
PE vs Industry
PE vs Market
PEG Ratio
PB vs Industry

23.7%

Undervalued compared to fair value

Share Price vs. Fair Value

Below Fair Value: RC ($14.51) is trading below our estimate of fair value ($19.03)

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 (9.7x) compared to the US Mortgage REITs industry average (12.1x).

PE vs Market: RC is good value based on its PE Ratio (9.7x) compared to the US market (16x).

Price to Earnings Growth Ratio

PEG Ratio: RC is poor value based on its PEG Ratio (4.6x)

Price to Book Ratio

PB vs Industry: RC is overvalued based on its PB Ratio (1x) compared to the US Mortgage REITs industry average (0.9x).

Future Growth

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

Future Growth Score

2/6

Future Growth Score 2/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

2.1%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: RC's forecast earnings growth (2.1% per year) is above the savings rate (1.9%).

Earnings vs Market: RC's earnings (2.1% per year) are forecast to grow slower than the US market (12.4% per year).

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

Revenue vs Market: RC's revenue (12.4% per year) is forecast to grow faster than the US market (7.8% per year).

High Growth Revenue: RC's revenue (12.4% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: Insufficient data to determine if RC's Return on Equity is forecast to be high in 3 years time

Past Performance

How has Ready Capital performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

22.1%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: RC has high quality earnings.

Growing Profit Margin: RC's current net profit margins (31%) are higher than last year (24%).

Past Earnings Growth Analysis

Earnings Trend: RC's earnings have grown significantly by 22.1% per year over the past 5 years.

Accelerating Growth: RC's earnings growth over the past year (42%) exceeds its 5-year average (22.1% per year).

Earnings vs Industry: RC earnings growth over the past year (42%) exceeded the Mortgage REITs industry 5.4%.

Return on Equity

High ROE: RC's Return on Equity (9.9%) is considered low.

Financial Health

How is Ready Capital's financial position?

Financial Health Score

2/6

Financial Health Score 2/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: RC's short term assets ($10.8B) exceed its short term liabilities ($2.7B).

Long Term Liabilities: RC's short term assets ($10.8B) exceed its long term liabilities ($6.8B).

Debt to Equity History and Analysis

Debt Level: RC's net debt to equity ratio (452.4%) is considered high.

Reducing Debt: RC's debt to equity ratio has increased from 346.1% to 465.4% over the past 5 years.

Debt Coverage: RC's debt is not well covered by operating cash flow (0.3%).

Interest Coverage: Insufficient data to determine if RC's interest payments on its debt are well covered by EBIT.

Balance Sheet

Dividend

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

Dividend Score

3/6

Dividend Score 3/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

11.58%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: RC's dividend (11.58%) is higher than the bottom 25% of dividend payers in the US market (1.51%).

High Dividend: RC's dividend (11.58%) is in the top 25% of dividend payers in the US market (3.97%)

Stability and Growth of Payments

Stable Dividend: RC has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: RC's dividend payments have increased, but the company has only paid a dividend for 5 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonable payout ratio (74.1%), RC's dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its high cash payout ratio (639.5%), RC's dividend payments are not well covered by cash flows.

Discover strong dividend paying companies

Management

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

3.0yrs

Average management tenure

CEO

Tom Capasse (64 yo)

5.58yrs

Tenure

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

Experienced Management: RC's management team is considered experienced (3 years average tenure).

Board Members

Experienced Board: RC's board of directors are considered experienced (5.6 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 substantially diluted in the past year, with total shares outstanding growing by 60.4%.

Data	Last Updated (UTC time)
Company Analysis	2022/05/18 00:00
End of Day Share Price	2022/05/18 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31