KBW Cuts Rocket Companies Rating to Underperform, Stock Prices Retreat
January 4, 2024
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Rocket Companies ($NYSE:RKT), Inc., is an American financial services holding company based in Detroit, Michigan. Recently, KBW, a financial services firm, has downgraded Rocket Companies’ stock to Underperform, causing the stock to retreat. This news has been a surprise to many investors, considering the stock had been performing well in the recent months. The downgrade has caused concern amongst shareholders and analysts alike.
Many are questioning the reasoning behind the move, noting that the company has seen strong growth and profitability since its inception. The company has also recently announced a strategic partnership with JPMorgan Chase & Co. It remains to be seen how this downgrade will affect Rocket Companies in the long term. In the meantime, analysts suggest that investors should remain cautious and take a wait-and-see approach as the market adjusts to the news.
Price History
On Wednesday, KBW, an investment bank and financial services company, released a report cutting Rocket Companies‘ rating to “Underperform” from its previous “Market Perform” rating. Following the report, Rocket Companies’ stock opened at $13.6 and closed at $13.3, resulting in a 6.6% drop from the prior closing price of 14.3. This is a significant change from the 10% increase Rocket Companies experienced the day prior, when the company launched its initial public offering (IPO).
The report noted that although the company had strong growth prospects, its valuation was already pricing in its desired success, leaving little room for further gains. This new rating has concerned investors and the stock price has taken a hit as a result. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Rocket Companies. More…
| Total Revenues | Net Income | Net Margin |
| – | -22.51 | – |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Rocket Companies. More…
| Operations | Investing | Financing |
| 10.82k | 578.74 | -12.82k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Rocket Companies. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 20.65k | 12.14k | – |
Key Ratios Snapshot
Some of the financial key ratios for Rocket Companies are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 4.5% | – | – |
| FCF Margin | ROE | ROA |
| – | – | – |
Analysis
As GoodWhale, we have conducted an analysis of ROCKET COMPANIES‘s wellbeing. Based on our Star Chart, ROCKET COMPANIES is classified as a ‘ufo’, a type of company we conclude is suitable for those looking to invest in companies with turnaround potential. Investors who are interested in such companies have to be willing to take on greater risk due to the lower health score of 0/10 that this company has. This score considers cashflows and debt and is a indicator of how likely the company is to pay off debt and fund future operations. Aside from this, our analysis shows that ROCKET COMPANIES is strong in medium in profitability and weak in growth, asset, dividend. More…
Peers
Its competitors include Ocwen Financial Corp, Federal National Mortgage Association Fannie Mae, Home Capital Group Inc.
– Ocwen Financial Corp ($NYSE:OCN)
Ocwen Financial Corporation is a financial services holding company that, through its subsidiaries, originates and services loans. The Company’s segments include Servicing, Lending, Real Estate Owned (REO), Investment Management and Corporate.
– Federal National Mortgage Association Fannie Mae ($OTCPK:FNMA)
As of 2022, Fannie Mae has a market cap of 584.66M. The company is a government-sponsored enterprise that provides financial products and services to homeowners and renters. Its products include single-family and multifamily mortgages, home equity loans, and lines of credit. Fannie Mae was founded in 1938 and is headquartered in Washington, D.C.
– Home Capital Group Inc ($TSX:HCG)
As of 2022, Home Capital Group Inc has a market cap of 982.97M. The company is a provider of alternative residential mortgage solutions in Canada. Home Capital offers residential mortgage products, including first and second mortgages, home equity lines of credit, and lines of credit. The company was founded in 1954 and is headquartered in Toronto, Canada.
Summary
Rocket Companies, Inc. (NYSE: RKT) has been facing a decrease in investor confidence and a corresponding decline in stock price following a downgrade to “Underperform” by investment firm KBW on July 14th. Analysts at KBW cited risk factors including slowing mortgage originations, competition from larger players, and potential regulatory and legal action as reasons for the downgrade. Rocket Companies will need to take steps to improve their market position and address these concerns if they hope to regain investor confidence and improve their stock price.
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