Rocket Companies (RKT) AI Stock Analysis

• Market Cap: $24.67B
• Dividend Yield: N/A
• Average Volume (3M): 13.85M
• Price to Earnings (P/E): 73.3
• Beta (1Y): 0.68
• Revenue Growth: 30.23%
• EPS Growth: N/A
• Country: US
• Employees: 14,200
• Sector: Financial
• Sector Strength: 82
• Industry: Financial - Mortgages
• EPS (TTM): 0.17
• Shares Outstanding: 150,150,480
• 10 Day Avg. Volume: 12,960,044
• 30 Day Avg. Volume: 13,845,560
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 9.34
• Price to Cash Flow (P/CF): -5.30
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $14.23
• Price Target Upside: 17.60% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 12

Rocket Companies' overall stock score reflects its mixed financial performance, with strengths in revenue growth and strategic acquisitions. However, the company faces challenges in operational profitability and cash flow generation, compounded by a high valuation and bearish technical indicators. The strategic acquisitions and positive earnings call sentiment provide some optimism, but risks remain.

Positive Factors

Acquisition Benefits

The acquisition of Mr. Cooper is expected to provide Rocket Companies with $500 million of annual run-rate revenue and cost synergies.

Market Share Growth

Rocket Companies believes it is taking market share, with guidance pointing to stronger originations despite industry forecasts calling for a decline.

Negative Factors

Integration Risks

There are concerns about the integration of two large acquisitions, which increases execution risk.

Stock Performance

RKT shares dropped by 7% following the announcement of the acquisition.

Rocket Companies Business Overview & Revenue Model

Company Description

Rocket Companies, Inc. engages in the tech-driven real estate, mortgage, and e-Commerce businesses in the United States and Canada. It operates through two segments, Direct to Consumer and Partner Network. The company's solutions include Rocket Mortgage, a mortgage lender; Amrock that provides title insurance, property valuation, and settlement services; Rocket Homes, a home search platform and real estate agent referral network, which offers technology-enabled services to support the home buying and selling experience; Rocket Auto, an automotive retail marketplace that provides centralized and virtual car sales support to online car purchasing platforms; and Rocket Loans, an online-based personal loans business. It also offer Core Digital Media, a digital social and display advertiser in the mortgage, insurance, and education sectors; Rocket Solar, which connect homeowners with digital financing solutions through a team of trained solar advisors; Truebill, a personal finance app that helps clients manage every aspect of their financial lives; Lendesk, a technology services company that provides a point of sale system for mortgage professionals and a loan origination system for private lenders; and Edison Financial, a digital mortgage broker. In addition, the company originates, closes, sells, and services agency-conforming loans. Rocket Companies, Inc. was founded in 1985 and is headquartered in Detroit, Michigan. Rocket Companies, Inc. operates as a subsidiary of Rock Holdings, Inc.

How the Company Makes Money

Rocket Companies generates revenue primarily through the origination of residential mortgages, with Rocket Mortgage being a significant contributor. The company earns money through the fees associated with originating and servicing loans, including interest rate spreads and origination fees. Additionally, Rocket Companies generates revenue from the sale of mortgages in the secondary market, which involves bundling and selling loans to investors. Ancillary revenue streams include services provided by Rocket Homes and Rocket Auto, which generate income through real estate and auto sales transactions. Strategic partnerships and technology platforms also play a role in enhancing Rocket Companies' service offerings and expanding its customer base.

Rocket Companies Financial Statement Overview

Summary

Rocket Companies exhibits a mixed financial performance. Recent revenue growth and reduced leverage are promising, but the company faces challenges with operational profitability and cash flow generation. The high gross profit margin and improved equity position are strengths, while cash flow issues and historical volatility in earnings signal potential risks.

Income Statement

The income statement reveals a mixed performance. The TTM (Trailing-Twelve-Months) shows a significant recovery in revenue compared to the previous year, with a revenue growth rate of 33.44%. However, the company has experienced fluctuating net income, resulting in an unstable net profit margin. The gross profit margin remains high at approximately 98.86% for TTM, indicating efficient cost management. Despite these positives, the volatility in EBIT and negative EBITDA in previous years highlight operational challenges.

Balance Sheet

The balance sheet reflects a strengthened equity position with a debt-to-equity ratio effectively reduced to zero in the TTM, thanks to the elimination of total debt. The equity ratio is robust at 36.90% TTM, indicating a solid asset backing by stockholders' equity. However, previous years showed significant leverage, which poses historical risk concerns. The improved ROE of 7.71% TTM is a positive sign of profitability on equity.

Cash Flow

Cash flow analysis shows a concerning negative operating cash flow in the TTM, a significant drop from the positive cash flow in 2023. Free cash flow has also turned negative, marking a decline in cash-generating capability. The company's ability to convert operating cash flow to net income is currently adverse, indicating potential liquidity issues.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
5.10B	3.61B	5.68B	12.68B	15.55B
	Gross Profit
5.10B	3.50B	5.59B	12.61B	15.47B
	EBIT
3.38B	-294.87M	160.92M	420.95M	330.33M
	EBITDA
465.38M	67.35M	0.00	0.00	0.00
	Net Income Common Stockholders
29.37M	-15.51M	699.93M	6.07B	9.40B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.27B	1.14B	722.29M	2.13B	1.97B
	Total Assets
24.51B	19.23B	20.08B	32.77B	37.53B
	Total Debt
5.34B	9.56B	8.71B	19.26B	21.95B
	Net Debt
-1.27B	8.43B	7.98B	17.13B	19.98B
	Total Liabilities
15.47B	10.93B	11.61B	23.02B	29.65B
	Stockholders Equity
9.04B	624.90M	576.70M	665.66M	490.50M
Cash Flow		Free Cash Flow
-3.43B	49.99M	10.72B	7.44B	-1.78B
	Operating Cash Flow
-2.63B	110.33M	10.82B	7.74B	-1.68B
	Investing Cash Flow
-495.47M	861.15M	578.74M	-664.85M	517.20M
	Financing Cash Flow
3.28B	-623.56M	-12.82B	-6.92B	1.76B

Rocket Companies Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 12.10
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RKT, the sentiment is Negative. The current price of 12.1 is below the 20-day moving average (MA) of 12.86, below the 50-day MA of 13.05, and below the 200-day MA of 14.28, indicating a bearish trend. The MACD of -0.34 indicates Positive momentum. The RSI at 44.90 is Neutral, neither overbought nor oversold. The STOCH value of 41.51 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RKT.

Rocket Companies Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
COOP	66 Neutral	$7.17B	11.00	14.71%	―	22.89%	39.00%
Sector *	63 Neutral	$12.06B	9.31	8.10%	79.51%	12.80%	-4.67%
GHLD	61 Neutral	$799.01M	8.25	7.97%	3.87%	40.27%	―
WD	60 Neutral	$2.53B	23.34	6.09%	3.52%	2.40%	-0.27%
PFSI	55 Neutral	$4.96B	16.52	8.45%	1.14%	42.36%	110.48%
UWMC	52 Neutral	$7.18B	34.73	10.51%	8.91%	12.29%	―
RKT	46 Neutral	$24.67B	73.32	4.43%	―	30.23%	―

Rocket Companies Corporate Events

Rocket Companies Announces Acquisition of Mr. Cooper Group

On March 31, 2025, Rocket Companies announced a definitive agreement to acquire Mr. Cooper Group Inc. in an all-stock transaction valued at $9.4 billion. This merger aims to create a combined servicing portfolio of $2.1 trillion, enhancing Rocket’s market position by integrating Mr. Cooper’s servicing platform with Rocket’s origination capabilities. The transaction is expected to generate significant revenue and cost synergies, contributing to organic growth and increased operating leverage. The merger, which has been approved by both companies’ boards, is anticipated to close in the fourth quarter of 2025, pending shareholder and regulatory approvals.

Rocket Companies Announces Up-C Collapse Restructuring Plan

On March 9, 2025, Rocket Companies announced a significant restructuring plan known as the Up-C Collapse, which involves a series of mergers and reorganizations to streamline its corporate structure. This plan will consolidate voting power and economic rights, allowing public stockholders and key stakeholders like Mr. Gilbert to participate directly in the company’s economics through common stock ownership. The restructuring is expected to maintain Rocket Companies as a ‘controlled company’ under NYSE rules, with Mr. Gilbert retaining a majority of the voting power. Additionally, Rocket Companies has entered into a merger agreement to acquire Redfin Corporation, which is subject to various approvals and conditions. This acquisition aims to enhance Rocket’s market position and operational capabilities, although it carries potential risks and uncertainties related to integration and market reactions.

Rocket Companies to Acquire Redfin in $1.75B Deal

On March 9, 2025, Rocket Companies announced an agreement to acquire Redfin in an all-stock transaction valued at $1.75 billion, with each Redfin share being exchanged for 0.7926 shares of Rocket’s Class A common stock. The merger aims to integrate Redfin’s real estate platform with Rocket’s mortgage services, enhancing the home-buying experience and driving growth in Rocket’s purchase mortgage market. The transaction is expected to close in the second or third quarter of 2025, pending shareholder approval and regulatory conditions. The merger is projected to generate significant synergies and be accretive to Rocket’s earnings by the end of 2026.