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Ready Capital Corporation (RC)
NYSE:RC
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Ready Capital
(NYSE:RC)
43Neutral
Positive Factors
Loan Originations
RC closed $784.3M of total loan originations and acquisitions, with high-margin SBA originations being very solid.
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
Dividend Reduction
The company's quarterly dividend was reduced by 50% to preserve liquidity.
Financial Stress
Distributable earnings did not cover the new dividend, indicating financial stress.
Loan Losses
Distributable earnings were negatively impacted by $89M, or $0.53 per share, in realized loan losses.
Ready Capital (RC) vs. S&P 500 (SPY)
Market Cap
$820.65M
Dividend Yield22%
Average Volume (3M)3.17M
Price to Earnings (P/E)―
Beta (1Y)1.32
Revenue Growth-24.40%
EPS Growth-210.65%
CountryUS
Employees475
SectorReal Estate
Sector Strength63
IndustryREIT - Mortgage
Share Statistics
EPS (TTM)-2.69
Shares Outstanding163,151,100
10 Day Avg. Volume2,543,602
30 Day Avg. Volume3,169,974
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)27.97
Price to Cash Flow (P/CF)0.90
P/FCF Ratio0.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$6.67Price Target Upside36.12% Upside
Rating ConsensusHold
Number of Analyst Covering7
Ready Capital Business Overview & Revenue Model
Company DescriptionReady Capital Corporation (RC) is a multi-strategy real estate finance company that operates within the financial services sector. It primarily focuses on originating, acquiring, financing, and servicing small to medium balance commercial loans. The company provides a range of financial solutions, including bridge loans, agency multifamily loans, and small business administration (SBA) loans, catering to real estate investors, developers, and small business owners across the United States.
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 a drastic decline in revenue and profitability. The high leverage and low equity ratios heighten financial risk, and while there are recent improvements in cash flow, the overall instability necessitates strategic adjustments.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 | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| -101.77M | 1.15B | 460.25M | 383.37M | 270.14M | Gross Profit |
| -101.77M | 1.09B | 404.94M | 324.97M | 215.77M | EBIT |
| -412.00M | 879.33M | 624.77M | 186.83M | 53.25M | EBITDA |
| 0.00 | 899.56M | 644.83M | 186.83M | 53.25M | Net Income Common Stockholders |
| -443.75M | 339.45M | 194.26M | 157.74M | 44.87M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 143.80M | 138.53M | 281.68M | 229.53M | 138.97M | Total Assets |
| 10.14B | 12.44B | 11.62B | 9.53B | 5.37B | Total Debt |
| 437.85M | 7.24B | 9.19B | 6.97B | 4.12B | Net Debt |
| 294.04M | 7.11B | 9.03B | 6.74B | 3.98B | Total Liabilities |
| 8.21B | 9.79B | 9.72B | 8.25B | 4.54B | Stockholders Equity |
| 1.84B | 2.55B | 1.80B | 1.28B | 815.40M |
| Cash Flow | Free Cash Flow | |||
| 286.40M | 54.06M | 359.15M | -3.74B | 68.89M | Operating Cash Flow |
| 286.40M | 51.13M | 359.15M | -34.44M | 68.89M | Investing Cash Flow |
| 1.54B | 1.02B | -1.56B | -1.72B | -59.44M | Financing Cash Flow |
| -1.88B | -1.13B | 1.17B | 1.88B | 63.05M |
Ready Capital Technical Analysis
Negative
4.90
Price Trends
6.18
Negative
6.55
Negative
7.10
Negative
Market Momentum
-0.38
Negative
29.99
Positive
28.12
Neutral
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 4.9 is below the 20-day moving average (MA) of 5.32, below the 50-day MA of 6.18, and below the 200-day MA of 7.10, indicating a bearish trend. The MACD of -0.38 indicates Negative momentum. The RSI at 29.99 is Positive, neither overbought nor oversold. The STOCH value of 28.12 is Neutral, 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 (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $2.29B | 10.36 | 8.62% | 14.06% | -11.26% | -33.80% | |
69 Neutral | $6.73B | 18.12 | 5.55% | 9.62% | -0.97% | 3.75% | |
68 Neutral | $1.47B | 13.50 | 7.06% | 7.92% | -5.09% | 6.25% | |
61 Neutral | $1.37B | ― | -6.02% | 12.17% | -9.71% | -426.57% | |
61 Neutral | $4.74B | 18.45 | -3.52% | 10.74% | 5.97% | -21.87% | |
60 Neutral | $3.48B | ― | -5.01% | 10.57% | -12.86% | -182.05% | |
43 Neutral | $820.65M | ― | -19.41% | 22.00% | -24.40% | -210.65% |
* Real Estate Sector Average
Performance Comparison
RC
Ready Capital
4.90
-3.13
-38.98%
ARI
Apollo Real Estate
9.80
-0.20
-2.00%
ABR
Arbor Realty
12.10
0.29
2.46%
BXMT
Blackstone Mortgage
20.29
2.15
11.85%
STWD
Starwood Property
20.04
1.16
6.14%
LADR
Ladder Capital
11.57
1.25
12.11%
Ready Capital Earnings Call Summary
Earnings Call Date: Mar 3, 2025 | % Change Since: -29.29% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a company undertaking aggressive measures to stabilize and recover from current financial challenges. While there is significant growth in small business lending and strategic actions to improve the core portfolio, the reduction in book value per share, GAAP losses, and dividend cut highlight ongoing difficulties.Highlights
Small Business Lending Growth
Ready Capital's small business lending operations experienced significant origination growth of 1.7x, with fourth quarter originations of $350 million and a record year of $1.2 billion. Ready Capital was the number one non-bank lender and number four overall SBA 7(a) lender in the country.
Core Portfolio Strength
The core CRE loan portfolio, totaling $6 billion, showed strong credit metrics and yield metrics, with a contractual yield of 8%, 93% pay rate, and 60-day plus delinquencies at only 2%.
Aggressive Actions for Recovery
Two aggressive actions were taken: a $284 million combined CECL and valuation allowances to mark non-performing loans to current values, and a reduction of the dividend to $0.125 per share to preserve book value and align with projected cash earnings.
Lowlights
Book Value Per Share Decline
The book value per share declined by 14% to $10.61 due to aggressive reserving on problem loans and valuation allowances.
GAAP and Distributable Earnings Losses
Fourth quarter GAAP losses per common share were $1.90, while distributable earnings showed a loss of $0.03, reflecting timing differences and realized losses from settlements.
Dividend Reduction
The dividend was reduced to $0.125 per share for the first quarter to better align with projected cash earnings and preserve book value.
Company Guidance
During the Ready Capital Fourth Quarter 2024 Earnings Conference Call, the company provided guidance for 2025, highlighting several strategic actions and expected outcomes. The company plans to address problem loans by setting aside a $284 million reserve, resulting in a 14% reduction in book value per share to $10.61. The dividend will be reduced to $0.125 per share in the first quarter to align with projected earnings and preserve capital. The company expects to achieve between $1 billion and $1.5 billion in new loan originations and aims for a recovery in net interest margins. The core portfolio, valued at $7.2 billion, is expected to yield 8% with a 93% pay rate. The company also anticipates $1.5 billion in SBA 7(a) loan originations and $300 million in USDA loans, contributing to expected earnings growth. Additionally, Ready Capital plans to execute a $150 million share repurchase program and expects the UDF IV merger to add 17% to earnings per share. Overall, these initiatives are expected to stabilize and enhance the company's financial performance through 2025.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.