Rocket Beats on Q3 EPS but Revenue Misses and Q4 Guide Falls Well Short
RKT sits 20% above its 52-week low of $10.18.
Summary
Rocket's Q3 adjusted EPS of $0.15 beat the $0.13 consensus, but adjusted revenue of $2.57B came in below the $2.60B estimate and fell from $2.78B in Q2. The bigger problem is the Q4 guide: adjusted revenue of $2.1B-$2.3B versus a $2.6B analyst estimate, a wide gap that points to a sharp sequential slowdown. Rocket Mortgage closed origination volume dropped to $33.5B from $49.1B in Q2 and badly missed the $43.5B consensus, with net lock volume of $40.4B also short. The offset is margin: total gain on sale widened to 2.54% from 2.48%, and adjusted EBITDA of $748M topped the $710M estimate, which the CEO tied to the highest profitability margin in nearly five years even as mortgage rates hit a three-year high. Shares rose 2.6% after hours, but the revenue miss and soft Q4 outlook are the numbers that matter for the lending thesis.
At the time of this announcement, RKT was trading at $12.18 on NYSE in the Finance sector, with a market capitalization of approximately $33.8B. The 52-week trading range was $10.18 to $24.36. This news item was assessed with negative market sentiment and an importance score of 7 out of 10. Source: Seeking Alpha.