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Ready Capital Corporation (RC)
NYSE:RC
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Ready Capital
(NYSE:RC)
46Neutral
Positive Factors
Loan Originations
RC closed $784.3M of total loan originations and acquisitions, with high-margin SBA originations being very solid.
Problem Loans Resolution
Ready Capital has been active on resolving problem loans, and the company was able to sell $330M of underperforming loans in the third quarter, which resulted in a realized loss of $0.11 per share.
Strategic Management
Analyst's recommendation for Ready Capital stock is based on the company's strategic management changes and legal actions that have become clearer.
Negative Factors
Distributable Earnings
Distributable earnings did not cover the new dividend, indicating financial stress.
Dividend Reduction
The quarterly dividend was reduced by 50% to $0.125 from $0.25 per share in order to preserve liquidity.
Earnings Impact
GAAP earnings were negatively impacted by a $285M, or $1.69 per share, increase to CECL loan loss reserves and a $29.8M, or $0.18 per share, impairment of real estate assets.
Ready Capital (RC) vs. S&P 500 (SPY)
Market Cap
$772.40M
Dividend Yield20.42%
Average Volume (3M)2.90M
Price to Earnings (P/E)―
Beta (1Y)1.01
Revenue Growth-31.47%
EPS Growth-204.79%
CountryUS
Employees475
SectorReal Estate
Sector Strength68
IndustryREIT - Mortgage
Share Statistics
EPS (TTM)-0.09
Shares Outstanding170,507,230
10 Day Avg. Volume3,147,485
30 Day Avg. Volume2,900,106
Financial Highlights & Ratios
PEG Ratio-0.07
Price to Book (P/B)0.39
Price to Sales (P/S)0.00
P/FCF Ratio2.00
Enterprise Value/Market Cap1.60
Enterprise Value/Revenue1.81
Enterprise Value/Gross Profit60.10
Enterprise Value/Ebitda2.40
Forecast
1Y Price Target
$5.92Price Target Upside33.03% Upside
Rating ConsensusHold
Number of Analyst Covering7
Ready Capital Business Overview & Revenue Model
Company DescriptionReady 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. The SBC Lending and Acquisitions segment, through its subsidiary, ReadyCap Commercial, LLC, originate SBC loans secured by stabilized or transitional investor properties using various loan origination channels. The Small Business Lending segment, through its subsidiary, ReadyCap Lending, LLC, acquires, originates, and services owner-occupied loans guaranteed by the SBA under its SBA Section 7(a) Program. The Residential Mortgage Banking segment, through its subsidiary, GMFS, LLC, originates residential mortgage loans. 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.
How the Company Makes MoneyReady Capital makes money through interest income generated from its diverse portfolio of real estate-backed loans. The company earns revenue by originating and servicing loans, charging borrowers interest and fees. Additionally, Ready Capital profits from the sale of loans to government-sponsored entities like Fannie Mae and Freddie Mac, and through securitization of its loan portfolios. The company also engages in partnerships and strategic acquisitions to enhance its loan servicing capabilities and expand its market presence, which contributes to its overall earnings.
Ready Capital Financial Statement Overview
Summary
Ready Capital is facing significant financial challenges with drastic declines in revenue and profitability. High leverage and low equity ratios present financial risks, although there is some resilience in cash flow. Strategic adjustments are crucial for recovery.Income Statement
Ready Capital has experienced significant volatility in revenue and profitability. The most recent year shows a drastic decline in revenue from $1,145 million to -$101 million, alongside a negative net income of -$443 million. This indicates a severe downturn in financial performance. Historical data shows some growth until 2023, but the recent downturn is concerning.30
Negative
Balance Sheet
The company's balance sheet reflects high leverage, with a Debt-to-Equity ratio of 2.38, suggesting significant financial risk. Equity has declined over the years, although there was a temporary increase in 2023. The equity ratio remains low at 18.1%, indicating potential vulnerability in its financial structure.45
Neutral
Cash Flow
Cash flow analysis shows some resilience with positive free cash flow in recent years, although the growth rate has been inconsistent. The operating cash flow to net income ratio was positive in 2023 but deteriorated in 2024 due to negative net income. There is a need for consistent positive cash flow to stabilize financial operations.55
Neutral
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 20.60M | 27.35M | 1.15B | 460.25M | 383.37M | 270.14M | Gross Profit |
| 20.60M | 27.35M | 1.09B | 404.94M | 324.97M | 215.77M | EBIT |
| 0.00 | 0.00 | 879.33M | 624.77M | 186.83M | 53.25M | EBITDA |
| 0.00 | 0.00 | 899.56M | 644.83M | 186.83M | 53.25M | Net Income Common Stockholders |
| -281.97M | -435.75M | 339.45M | 194.26M | 157.74M | 44.87M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 168.59M | 0.00 | 138.53M | 281.68M | 229.53M | 138.97M | Total Assets |
| 12.44B | 10.14B | 12.44B | 11.62B | 9.53B | 5.37B | Total Debt |
| 9.22B | 6.04B | 7.24B | 9.19B | 6.97B | 4.12B | Net Debt |
| 9.06B | 5.89B | 7.11B | 9.03B | 6.74B | 3.98B | Total Liabilities |
| 9.79B | 8.21B | 9.79B | 9.72B | 8.25B | 4.54B | Stockholders Equity |
| 2.55B | 1.84B | 2.55B | 1.80B | 1.28B | 815.40M |
| Cash Flow | Free Cash Flow | ||||
| 359.83M | 274.81M | 54.06M | 359.15M | -3.74B | 68.89M | Operating Cash Flow |
| 359.83M | 274.81M | 51.13M | 359.15M | -34.44M | 68.89M | Investing Cash Flow |
| 1.54B | 1.54B | 1.02B | -1.56B | -1.72B | -59.44M | Financing Cash Flow |
| -1.83B | -1.88B | -1.13B | 1.17B | 1.88B | 63.05M |
Ready Capital Technical Analysis
Negative
4.45
Price Trends
4.63
Negative
5.54
Negative
6.30
Negative
Market Momentum
-0.09
Negative
48.57
Neutral
87.47
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RC, the sentiment is Negative. The current price of 4.45 is above the 20-day moving average (MA) of 4.40, below the 50-day MA of 4.63, and below the 200-day MA of 6.30, indicating a neutral trend. The MACD of -0.09 indicates Negative momentum. The RSI at 48.57 is Neutral, neither overbought nor oversold. The STOCH value of 87.47 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RC.
Ready Capital Risk Analysis
Ready Capital disclosed 128 risk factors in its most recent earnings report. Ready Capital reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Ready Capital Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
63 Neutral | $1.14B | 9.41 | 8.09% | 10.40% | 7.13% | 64.82% | |
62 Neutral | $1.01B | 10.00 | 7.34% | 14.36% | 26.34% | 79.07% | |
60 Neutral | $2.82B | 10.29 | 0.31% | 8508.26% | 5.91% | -17.42% | |
56 Neutral | $964.34M | 17.23 | 5.07% | 12.31% | -6.28% | -49.57% | |
54 Neutral | $647.48M | 59.13 | 2.42% | 10.50% | -16.46% | ― | |
48 Neutral | $800.04M | 28.34 | 2.92% | 11.48% | 6.72% | 228.13% | |
46 Neutral | $772.40M | ― | -12.42% | 20.42% | -31.47% | -204.79% |
* Real Estate Sector Average
Performance Comparison
RC
Ready Capital
4.45
-3.07
-40.82%
CIM
Chimera Investment
13.91
2.07
17.48%
MFA
MFA Financial
9.81
0.28
2.94%
RWT
Redwood
5.88
>-0.01
-0.17%
KREF
Kkr Real Estate Finance
9.35
0.47
5.29%
FBRT
Franklin BSP Realty Trust
11.43
-0.29
-2.47%
Ready Capital Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: 1.60%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. While there were successful strategic actions like book value stability, non-core portfolio liquidation, and positive SBA performance, significant challenges remain. These include declines in net interest income, increased loan delinquencies, and issues with the Portland asset. The UDF merger provided a boost, but the overall picture is balanced between achievements and ongoing challenges.Q1-2025 Updates
Positive Updates
Stable Book Value Per Share
Book value per share remained stable at $10.61 quarter-over-quarter, benefiting from strategic actions including share repurchases and merger activities.
Successful Non-Core Portfolio Liquidation
Surpassed first-quarter liquidation targets by nearly 2x, generating $28 million of liquidity and reducing the non-core portfolio by 6%.
SBA Business Performance
First-quarter SBA volumes remained high at $343 million, with a 12-month default rate of 3.2% versus the industry average of 3.4%.
UDF Merger Accretion
The UDF merger was 1.3% accretive to book value per share, adding $167.1 million of equity.
Bargain Purchase Gain
Recognized a bargain purchase gain of $102.5 million related to the UDF IV merger.
Negative Updates
Net Interest Income Decline
Net interest income declined to $14.6 million due to movement of non-core assets to non-accrual status, generating a cash yield of only 1.3%.
Increased Loan Delinquencies
60-day plus delinquencies increased to 4%, with risk rated four and five loans rising to 7.5% of the total portfolio.
Portland Mixed Use Asset Challenges
Marked down to $426 million, the Portland asset's move to non-accrual resulted in a quarter-over-quarter $0.13 per share reduction in earnings.
Distributable Earnings Loss
First quarter distributable earnings were a loss of $0.09 per common share, impacted by realized losses on asset sales.
Challenging Debt Capital Markets
Concerns over refinancing $650 million of corporate debt maturing through 2026 amidst choppy debt capital markets.
Company Guidance
During Ready Capital's first quarter 2025 earnings conference call, several key financial metrics and strategic actions were highlighted. The company reported a stable book value per share at $10.61, with a quarter-over-quarter GAAP earnings per common share of $0.47. The net interest income was $14.6 million, largely impacted by the transition of non-core assets to non-accrual status, resulting in a cash yield of 1.3%. The core portfolio, featuring a $5.9 billion concentration in multifamily loans, demonstrated a healthy credit profile with 60-day plus delinquencies at 4% and an interest yield of 8.4%. Additionally, Ready Capital successfully liquidated $51 million in non-core assets at a 102% premium, aiming to reduce the non-core portfolio further by year-end. Despite current challenges, the company expects to maintain its dividend level, targeting accretion in 2026 driven by the liquidation of non-core assets and potential favorable changes in the economic environment.Ready Capital Corporate Events
M&A TransactionsBusiness Operations and Strategy
Ready Capital Completes Acquisition of UDF IV
Neutral
Mar 13, 2025
On March 13, 2025, Ready Capital Corporation announced the completion of its acquisition of United Development Funding IV (UDF IV), following an agreement dated November 29, 2024. The merger, which involves the conversion of UDF IV shares into Ready Capital shares and contingent value rights (CVRs), aims to scale Ready Capital’s portfolio and expand its core business. The CVR Agreement allows CVR holders to receive additional Ready Capital shares based on cash proceeds from a specific loan portfolio. This strategic move is expected to unlock growth and value creation opportunities, although it also poses risks related to loan performance and integration challenges.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.