Stock Analysis & Ideas

All Eyes on Recently Listed Rocket Companies’ Q2 Results

Story Highlights

After the fintech company’s disappointing first quarter performance, analysts don’t expect a miracle in the second quarter. 

Digital mortgage solutions provider Rocket Companies, Inc. (NYSE: RKT) is scheduled to announce its second-quarter results this week. The company, which was listed on the New York Stock Exchange exactly two years ago, got exposed to market volatility in a very short span of time.

Rocket launched its initial public offering (IPO) on August 6, 2020, at a price of $18 per share and raised $1.8 billion. It reached an all-time high of over $25 in the month of its launch. Thereafter, the stock remained stable and traded at around $20 until July last year. However, since then, it started falling and reached a historical low of $6.27 on June 13, 2022.

What to Expect from RKT’s Q2 Results?

Rocket is scheduled to release its second-quarter results on August 4. The Street anticipates earnings of two cents per share, significantly lower than 46 cents per share reported in the same quarter last year.

Meanwhile, the company expects closed loan volumes to range from $35 billion to $40 billion and net rate lock volumes between $31 billion and $38 billion. Further, gain on sale margins is expected to range from 2.60% to 2.90% in the quarter.

Rocket’s Q1 Performance

In the first quarter of 2022, the fintech company’s EPS declined more than 80% year-over-year to 15 cents per share. The figure also missed analysts’ expectations by three cents.

Revenue fell 41% year-over-year to $2.7 billion, and Rocket Mortgage’s closed loan volume totaled $54 billion. The gain on sale margin stood at 3.01%, and adjusted EBITDA amounted to $450 million.

Analysts Signal Caution

On TipRanks, Rocket has a Hold consensus rating based on two Buys, 12 Holds and two Sells. RKT’s average price target of $8.47 implies 15% downside potential.

But, Bloggers & Hedge Funds Are Bullish on RKT Stock

TipRanks data shows that financial bloggers are 80% Bullish on RKT, compared to the sector average of 67%.

Similarly, TipRanks’ Hedge Fund Trading Activity tool shows that the confidence in Rocket is currently Very Positive, as the cumulative change in holdings across all five hedge funds that were active in the last quarter was an increase of 1.9 million shares.

Concluding Thoughts

Rocket’s recent performance has been marred by the rise in interest rates. The company could have a bright future if it continues to launch innovative products and solutions and keep its costs under check.

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