Rithm Capital Corp. ((RITM)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Rithm Capital Corp.’s recent earnings call showcases a strong performance across its business lines, marked by impressive growth and strategic initiatives for future expansion. Despite these successes, the company faces challenges, including undervaluation and uncertainties in market conditions.
Record Earnings Growth
Rithm Capital Corp. reported a remarkable 76% earnings growth since Q1 2021, with a 27% increase year-over-year. This significant growth marks a high point for the company, reflecting its strong financial health and effective business strategies.
Strong Performance in NewRez
NewRez delivered an exceptional quarter, achieving a 20% return on equity (ROE) and generating $1 billion in pretax income for 2024, up 26% from the previous year. This performance underscores NewRez’s strength and its contribution to Rithm Capital’s overall success.
Sculptor Acquisition Success
One year after acquiring Sculptor, Rithm Capital is reaping the benefits with the Multistrat Fund achieving an 18% gross return and the Tactical Credit Fund achieving a 25% gross return. This acquisition has proven to be a strategic success for the company.
Growth in Genesis Capital
Genesis Capital has notably increased its origination from $2 billion to $3.6 billion, and EBITDA has surged from $40 million to $100 million since its acquisition. This growth highlights Genesis Capital’s expansion and profitability within Rithm Capital’s portfolio.
Continued Expansion Plans
Rithm Capital announced plans for a new global energy infrastructure platform and is focusing on expanding its third-party asset management business. These initiatives are part of the company’s strategy to diversify and strengthen its market position.
Undervalued Equity
Despite its strong performance, Rithm Capital’s equity is perceived as undervalued compared to other asset managers. This undervaluation presents both a challenge and an opportunity for the company to potentially attract new investors.
Potential Delays in NewRez Listing
There is uncertainty regarding the timeline for potentially listing NewRez, with expectations now possibly extending into 2025. This delay reflects the cautious approach in navigating the current market conditions.
Market Challenges
Rithm Capital is facing challenges in the mortgage credit market, with availability expected to remain low. This poses a risk to future growth and requires strategic management to mitigate potential impacts.
Forward-Looking Guidance
In its forward-looking guidance, Rithm Capital highlighted substantial growth metrics, including a combined AUM of approximately $80 billion. The company reported a year-over-year earnings growth of 27% with a 17% return on equity, maintaining a strong dividend yield of 9.2%. These metrics underscore Rithm Capital’s robust financial foundation and its optimistic outlook for the future.
In summary, Rithm Capital Corp.’s earnings call revealed a robust performance characterized by significant earnings growth and strategic acquisitions. Despite facing challenges like undervaluation and market uncertainties, the company’s forward-looking strategies and continued expansion plans position it well for future success. The overall sentiment is optimistic, with strong indications of potential growth and stability.
