If the market starts pricing in higher interest rates, then Rocket and the other mortgage lenders will face increasing pressure. This would explain the stock's sudden drop following its earnings report. CEO Farner praised its getting 98% of its team members to work from home during Covid-19.
Full Answer
Will Rocket Mortgage’s stock rise?
Here are three reasons Rocket Mortgage’s stock — which is down some 13% since it hit nearly $30 the day of its August 2020 IPO, according to Morningstar — could rise: The bear case against the stock: (I have no financial interest in the securities mentioned in this post).
Will rocket stock go down?
The case to bet that Rocket stock will go down hinges on rising mortgage rates and a high valuation. Mortgage originators are generally hurt by rising mortgage rates since it means that fewer people might want to refinance or buy a home. That increase is not hurting Rocket’s business.
How did rocket's earnings beat forecasts?
Rocket’s per share earnings of $1.09 beat by 22 cents while revenue for the quarter at $4.78 billion — topped forecasts by $80 million, according to TheStreet.com. For the current quarter, Rocket forecasts what the Journal dubbed “better-than-expected guidance.”
What is the price targets for rocket companies stock?
“Based on seven analysts offering 12 month price targets for Rocket Companies in the last 3 months. The average price target is $25.14 with a high forecast of $33.00 and a low forecast of $19.00.
Why is Rocket mortgage stock going down?
Rocket Companies (NYSE:RKT) stock is falling 2.2% in premarket trading after BofA Securities analyst Mihir Bhatia downgrades the lending platform's stock to Underperform from Neutral due to the "challenging rate backdrop" for mortgage originators.
Why is Rocket Companies stock so low?
RKT, -3.33% sank 7.3% toward a record low in midday trading Tuesday, after BofA Securities turned bearish on the mortgage financing company, citing concerns over the impact of a rising rate environment. Analyst Mihir Bhatia downgraded the stock to underperform from neutral and slashed the price target to $11 from $21.
Will Rocket stock go back up?
Shane foresees Rocket will continue to grow its market share as it invests in its direct-to-consumer services and the industry enters a period of consolidation. The analyst upped his earnings per share estimate for the 2023 fiscal year to $1.69, up from $1.58.
Is Rocket mortgage stock a good buy?
We rate shares of RKT as a buy with a price target of $17.50 for the year ahead representing a forward P/E of 15x on the current consensus 2022 EPS. We believe the company will ultimately outperform expectations, benefiting from a stronger than expected housing market and demand for mortgages overall.
Is RKT undervalued?
Over the past year, RKT's P/CF has been as high as 303.82 and as low as 5.12, with a median of 73.71. These are just a handful of the figures considered in Rocket Companies's great Value grade. Still, they help show that the stock is likely being undervalued at the moment.
Is RKT a meme stock?
Move Over, GameStop.
Is RKT a buy or sell?
For example, a company with a P/E ratio of 25 and a growth rate of 20% would have a PEG ratio of 1.25 (25 / 20 = 1.25)....Momentum Scorecard. More Info.Zacks RankDefinitionAnnualized Return1Strong Buy25.08%2Buy18.56%3Hold10.15%4Sell5.79%2 more rows
Is RKT going to pay a dividend?
RKT pays a dividend of $1.01 per share. RKT's annual dividend yield is 11.84%.
Is Rocket a good company?
Rocket is also an extremely profitable company that made record profits in the fiscal year (FY) 2020. In its FY 2020 earnings report, it saw a revenue of $15.73 billion, up 208% year-over-year (YoY), whilst its net income was up a whopping 948% to $9.39 billion.
The home mortgage lender has not been able to gain traction in a hot housing market
Dave mainly covers financial stocks, primarily banks and asset managers, and investment planning. He's covered mutual funds and institutional investments for Pensions & Investments, personal finance for S&P, and money markets and bonds for Crane Data. Dave has been a Fool since 2014.
What happened
Rocket Companies ( NYSE:RKT) had another rough month in July, dropping 10.9%, according to S&P Global Market Intelligence. The leading home mortgage lender in the U.S. was well off the benchmark, the S&P 500, which gained 2.3% in July. The mortgage company's stock price is down about 9% year to date as of Aug. 4, trading at about $17 per share.
So what
Rocket is the largest home mortgage lender in the U.S. by loan originations. It went public last August at $18 per share and is down slightly from that one year later. But it's been a bumpy ride as the stock spiked to over $40 per share in March only to come crashing back to earth in the ensuing months.
Now what
There are a few issues at play here that may be hurting Rocket. One is increased competition, particularly from United Wholesale Mortgage, the largest wholesale mortgage lender and fourth-largest overall.
Why is Rocket Mortgage down?
Here are three reasons Rocket Mortgage’s stock — which is down some 13% since it hit nearly $30 the day of its August 2020 IPO , according to Morningstar — could rise: Outstanding financial results and guidance. Special dividend. Trading below its price target. The bear case against the stock: Rising interest rates could slow demand for mortgages.
Will Rocket stock go down?
The case to bet that Rocket stock will go down hinges on rising mortgage rates and a high valuation. Mortgage originators are generally hurt by rising mortgage rates since it means that fewer people might want to refinance or buy a home. That increase is not hurting Rocket’s business.
What happened
Ever since Rocket Lab ( RKLB -1.32% ) founder Peter Beck promised in March that his company would design a new rocket that will be reusable (like the rockets built by SpaceX already are), investors have been waiting to see what the new "Neutron" rocket would look like.
So what
I think investors' reaction to Rocket Lab's big Neutron reveal can be summarized in just six words: "Buy the rumor, sell the news." Because from a long-term investor's perspective, there really wasn't anything in Rocket Lab's announcement Thursday to justify selling off the stock.
Now what
So why are investors selling the stock? Simply put, because now that Neutron has been revealed, the catalyst has passed and there won't be anything really big to look forward to in the way of Rocket Lab PR for quite some time. (Or at least, nothing we know about).
When will Rocket earnings be released in 2021?
Rocket Companies (NYSE: RKT) reported great earnings for first-quarter 2021 on May 5, but the market doesn’t care about historical numbers. It looks to the future. And rates are rising, Rocket mortgage margins are compressing. As a result, its earnings outlook is cloudier.
How much will the US economy fall in 2022?
And don’t even talk about 2022. They expect 2022 revenue to fall to $10.41 billion. So, in the space of 2 years from 2020, revenue will be down by $5 billion or 33.8%. That mostly depends on how far interest rates rise.
Do people refinance their mortgages?
People do not refinance their mortgages and houses do not sell as well when rates rise. Everyone always wants a bargain and they would rather wait until rates fall. Moreover, now that Covid vaccines are taking effect, people are moving, getting out of the house and remodeling activity has dropped.
