RKT - Embedded Expectations Analysis - 2020 12 01
Rocket Companies, Inc. (RKT:USA) currently trades near historical lows relative to UAFRS-based (Uniform) earnings, with a 4.3x Uniform P/E. At these levels, the market has bearish expectations for the firm, but management may be concerned about their ability to meet purchase origination volume, the sustainability of home loan and digital demand, and their ability to sustain business growthSpecifically, management may lack confidence in their ability to achieve a 25% share of
the mortgage market and sustain sales margin gains. They also appear to lack confidence in their ability to maintain their retention rate. They may also be exaggerating their ability to surpass their purchase origination volume records in Q3 and scale faster than their competitors. Furthermore, they may have concerns about the sustainability of home loan and digital demand, the potential of their large servicing platform, and competitive pricing pressures. Management may also lack confidence in their ability to control costs, secure loan officers, and sustain business growth. Finally, they may have concerns about complications from their licensing requirements, the potential of their next loan offering, and the people's reaction to the GSE adverse market fee
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.