It would be easy to believe that Rocket Companies (NYSE:RKT), perhaps best known for its Rocket Mortgage operations, would have had a rough second quarter given the nature of the market as a whole. However, that proved to be not the case, and second quarter earnings turned out better than expected. Third quarter projections said another shocker may be brewing, and Rocket Companies blasted up over 10% in the closing minutes of Friday afternoon’s trading session.
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The second quarter’s figures were sound enough. Rocket Companies posted a loss of $0.02 per share, but analysts were looking for a $0.05 loss. Meanwhile, Rocket Companies’ revenue of $1.24 billion not only beat the analyst projections of $967.08 million, but also delivered a solid win against 2022’s second quarter as well, up 9.7% against that time. Guidance for the third quarter, meanwhile, was positive, if only just; Rocket projected revenue between $850 million and $1 billion, which is just barely a win against consensus estimates that called for $999.9 million.
Rocket made quite a few changes going into the second quarter, and these appear to be paying off. It staged a company-wide cost cutting odyssey, and toned up its efficiencies through what it called “prioritization efforts”. A “voluntary career transition program” also kicked in—likely part of that prioritization—and costs came down further. Better yet, spring home sales also proved to help out Rocket’s efforts; while there were fewer houses available for Rocket to sell, those that did sell still did reasonably well. While the market is off its highs—down about 11% against this time last year—it’s still higher than normal.
Analysts, however, are a little less sure of Rocket’s capacity to pull off a win. Rocket Companies stock is firmly considered a Hold, thanks to a combination of 10 Hold ratings and two Sell. Further, with an average price target of $8.64, Rocket Companies stock also comes with a 22.68% downside risk.
