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Ready Capital Corporation (RC)
NYSE:RC
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Ready Capital
(NYSE:RC)
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Rating:49Neutral
Price Target:
$2.00
▲(6.95% Upside)
Action:ReiteratedDate:03/03/26
The score is held down primarily by weak financial performance (recent large losses, capital erosion, and high leverage). Offsetting factors include improved 2025 cash generation and a structured remediation plan from management, while technicals remain mixed and valuation support is limited by losses despite a very high dividend yield.
Positive Factors
Improved Free Cash Flow
Material positive free cash generation in 2025 provides a durable liquidity cushion to fund maturities, buy down leverage and execute planned loan sales. Sustained FCF makes deleveraging and remediation feasible over the next several quarters and supports operational resilience while earnings recover.
Clear Remediation Plan & Execution
Management’s concrete targets (free cash >$850M, substantial loan sales, explicit leverage and cost-reduction goals) create a measurable framework to repair the balance sheet. That structural plan, combined with reported execution to date, improves odds of lasting stability and reduces strategic uncertainty over the medium term.
Capital-light SBA Business Strength
Being a top-five SBA originator and pursuing additional securitizations shifts mix toward capital-light, fee-rich lending. Expanding SBA exposure improves long-term returns per unit of capital, diversifies revenue away from legacy CRE exposures, and supports more stable, repeatable cash generation.
Negative Factors
High Leverage & Capital Erosion
Elevated leverage and declining equity materially reduce the firm’s capital cushion, leaving it sensitive to asset-value moves or funding-cost spikes. High leverage constrains strategic flexibility, raises refinancing risk on future maturities and makes recovery dependent on successful execution of sales and runoff.
Significant Credit Losses & Reserves
Material realized losses, large reserve builds and elevated nonaccruals signal sustained asset-quality stress. These items erode capital, reduce distributable earnings and can lead to further write-downs if market conditions worsen, prolonging the recovery timeline and pressuring dividend sustainability.
Volatile Revenue & Uneven Profitability
Significant volatility in revenue and recurring profitability undermines predictability of cash flows and capital planning. Reliance on one-off loan sales and episodic gains makes earnings quality uneven, complicating medium-term reinvestment, dividend policy and investor confidence until underlying operating margins stabilize.
Ready Capital (RC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$304.58M
Dividend Yield26.82%
Average Volume (3M)2.66M
Price to Earnings (P/E)―
Beta (1Y)0.90
Revenue Growth-43.56%
EPS Growth-166.72%
CountryUS
Employees475
SectorReal Estate
Sector Strength53
IndustryREIT - Mortgage
Share Statistics
EPS (TTM)-0.43
Shares Outstanding162,878,780
10 Day Avg. Volume3,585,856
30 Day Avg. Volume2,658,587
Financial Highlights & Ratios
PEG Ratio0.03
Price to Book (P/B)0.23
Price to Sales (P/S)0.72
P/FCF Ratio-1.76
Enterprise Value/Market Cap19.44
Enterprise Value/Revenue11.85
Enterprise Value/Gross Profit-34.43K
Enterprise Value/Ebitda-38.62
Forecast
1Y Price Target
$1.93Price Target Upside3.21% Upside
Rating ConsensusModerate Sell
Number of Analyst Covering3
EPS Forecast (FY)-0.58
Revenue Forecast (FY)$300.25M
Ready Capital Business Overview & Revenue Model
Company DescriptionReady Capital Corporation operates as a real estate finance company in the United States. The company acquires, originates, manages, services, and finances small to medium balance commercial (SBC) loans, small business administration (SBA) loans, residential mortgage loans, and mortgage backed securities collateralized primarily by SBC loans, or other real estate-related investments. It operates through three segments: SBC Lending and Acquisitions; Small Business Lending; and Residential Mortgage Banking. The SBC Lending and Acquisitions segment, through its subsidiary, ReadyCap Commercial, LLC, originate SBC loans secured by stabilized or transitional investor properties using various loan origination channels. The Small Business Lending segment, through its subsidiary, ReadyCap Lending, LLC, acquires, originates, and services owner-occupied loans guaranteed by the SBA under its SBA Section 7(a) Program. The Residential Mortgage Banking segment, through its subsidiary, GMFS, LLC, originates residential mortgage loans. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Sutherland Asset Management Corporation and changed its name to Ready Capital Corporation in September 2018. Ready Capital Corporation was founded in 2007 and is headquartered in New York, New York.
How the Company Makes MoneyReady Capital primarily makes money from (1) net interest income generated by earning interest on its loan and investment portfolio and paying interest on its financing facilities (including secured borrowings/warehouse lines, repurchase agreements, and securitizations), and (2) fee-based income tied to origination and servicing. Key revenue streams typically include: Interest income on originated and acquired loans (e.g., small-balance CRE loans, residential mortgages and related assets) and on real estate-related securities, minus interest expense on the debt and other funding used to finance those assets (the spread between asset yields and funding costs is a core driver of earnings). Origination-related fees and gains, which can include fees charged for originating loans and potential gains (or losses) from selling loans into the secondary market or securitizing them; in SBA-oriented lending, this commonly includes monetization of government-guaranteed portions when sold, along with related premium/fee income (specific program mix and amounts: null). Servicing income from servicing loans for its own portfolio and, where applicable, for third parties; this can include contractual servicing fees and ancillary servicing-related income, net of servicing costs. Other income items may include management of securitization vehicles and valuation changes on certain assets or hedges carried at fair value, which can affect reported earnings period-to-period (specific hedging strategy details: null). Factors influencing earnings include credit performance and loss provisions on loans, prepayment and origination volumes, the level and shape of interest rates (which affect both asset yields and funding costs), access to and pricing of secured financing/securitization markets, and the company’s ability to recycle capital through loan sales and securitizations.
Ready Capital Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 13, 2026
Earnings Call Sentiment Neutral
The call conveyed significant near‑term financial stress (GAAP loss, a 14% quarterly book value decline, sizable reserve builds, elevated nonaccruals and realized losses) driven by an active portfolio repositioning. Offsetting this were clear, actionable liquidity targets and measurable progress (approximately $380M generated to date, completed loan sales at prices in the high‑90s, a plan to generate >$850M total free cash, leadership realignment, and stabilization progress at the Ritz property). Management presented a detailed execution plan with concrete milestones (loan sales by end of Q2, targeted cost reductions, and SBA securitization in Q2). Given the material near‑term headwinds balanced against specific execution progress and a clear remediation plan, the overall tone is cautiously constructive but acknowledges significant challenges.Q4-2025 Updates
Positive Updates
Liquidity Progress and Clear Target
Generated approximately $380 million of free cash to date (comprised of $130 million from bulk portfolio sales and $250 million from portfolio runoff/asset resolutions). Management targets over $850 million of free cash and reports being ~35% toward that objective.
Planned Additional Free Cash and Execution Timeline
Anticipates an additional $500 million in free cash by year-end: $250 million expected from continued portfolio runoff (consistent with a 36% trailing twelve-month repayment rate) and $250 million from planned $1.5 billion of loan sales (focus on NPL and sub-yielding assets). Loan sales expected substantially complete by end of Q2.
Leadership and Organizational Realignment
Promoted Dominic Scally to Chief Credit Officer and Co‑President of ReadyCap Commercial; Gary Taylor transitioning to President of ReadyCap Lending to focus on SBA — actions intended to support the balance-sheet repositioning and capitalize on capital‑light business lines.
Leverage and Cost Reduction Targets
Plan to reduce leverage by 1.0x to a target of 2.5x and target a 25% reduction in operating costs to align the CRE origination business to a lower-cost structure and increase capital allocation to small business lending from 10% to 20%.
SBA Business Focus and Near-Term Funding
Remains a top-five SBA lender; SBA originations were impacted by the government shutdown but management plans to come to market with a fourth SBA securitization in Q2 and increase emphasis on this higher-ROE, capital-light business line.
Successful Loan Sales Execution
Completed large loan sales in February (reported $855 million) with pricing in the high‑90s relative to par; earlier bulk sales contributed $130 million of free cash.
Ritz Property Stabilization Progress
Ritz asset represents 16% of year‑end equity; condominium sales launched (phase one: 16 units in contract + 9 reservations = 27% of 131 units), average price to date $737/sq ft. Hotel metrics improved year‑over‑year: occupancy +6.5%, ADR +5% to $492, RevPAR $210; office/retail showing increased tenant interest.
Ability to Address Near‑Term Maturities
Management reports current free cash (~$200 million) plus ongoing liquidity generation provides substantial cushion to address upcoming maturities ($67 million in Q3 and $450 million in Q4), and the firm successfully retired its 5.75% February senior unsecured note at maturity.
Negative Updates
Significant GAAP and Distributable Losses
Reported a GAAP loss from continuing operations of $1.46 per share for the quarter. Distributable earnings were a loss of $0.43 per share (or a loss of $0.09 per share excluding realized losses on asset sales).
Material Book Value Decline and Reserve Build
Book value per share declined 14% in the quarter to $8.79 from $10.28 prior quarter. Combined valuation allowance and CECL reserves increased by $173 million (comprised of $23 million valuation allowances and $150 million incremental CECL reserves), driven by accelerated resolution timelines and loans moved to held‑for‑sale.
Rise in Nonaccruals and Accrued Interest Write‑downs
Nonaccrual loans increased to 27% of the portfolio at year‑end. Management reversed roughly $53 million of accrued interest in Q4; accrued interest remaining on the balance sheet is approximately $42 million only for loans expected to be held to maturity.
Recurring Revenue Decline
Recurring revenue fell to $41.5 million from $47.3 million QoQ (approximately a 12% decline), largely due to a $7.7 million reduction in gain‑on‑sale revenue from lower SBA 7(a) and USDA loan sales amid the government shutdown.
Higher Operating Expenses
Operating expenses increased $7.4 million quarter‑over‑quarter to $59.9 million (roughly a 14% increase vs. the prior quarter), driven by higher compensation, legal fees, and a reduced tax benefit.
Realized and REO Losses
Reported $29 million of realized losses on asset sales, $15 million of REO charge‑offs, and $9.1 million of unrealized losses in the quarter, reflecting portfolio repositioning costs.
Quarterly Negative Earnings Drag from Subset of Legacy CRE
Approximately $1.4 billion of sub‑ and nonperforming loans and REO targeted for sale/resolution are creating a quarterly negative earnings drag of roughly $0.08 per share and cash outflows of about $13 million per quarter until resolved.
SBA Originations Disrupted
SBA 7(a) originations were curtailed by the government shutdown, resulting in a reported 50% decline in originations in the quarter to $84 million — materially below 2026 volume targets despite the business being a strategic focus.
Company Guidance
Management guided to generate over $850 million of free cash while shrinking the legacy CRE book ~60% to about $2.0 billion, noting they have already produced roughly $380 million of free cash ($130M from bulk sales, $250M from runoff/resolutions) and expect an additional $500M by year‑end — $250M from runoff (driven by a 36% trailing 12‑month repayment rate) and $250M from roughly $1.5 billion of planned loan sales (substantially complete by end of Q2). They plan to resolve or sell about $1.4 billion of sub‑ and nonperforming loans/REO (currently a ~$0.08/quarter per‑share negative earnings drag and ~$13M of quarterly cash outflows), target a 25% reduction in operating costs, shift capital allocation to small‑business lending from 10% to 20%, and reduce leverage by 1.0x to 2.5x, while managing near‑term maturities of $67M in Q3 and $450M in Q4 (having retired a 5.75% senior note). Key quarter metrics cited: Q4 book value down 14% to $8.79/share (from $10.28), GAAP loss from continuing ops $1.46/share, distributable loss $0.43/share ($0.09 ex realized losses), nonaccruals 27%, valuation allowance/CECL reserves up ~$173M ($23M valuation allowance on ~$600M transferred loans, $150M CECL increase), roughly $200M of free cash on hand, ~35% of the liquidity target achieved, and progress on the Ritz asset (16% of equity) with a 27% condo sellout to date at ~$737/sq ft and hotel metrics ADR $492, RevPAR $210, occupancy +6.5% YoY.Ready Capital Financial Statement Overview
Summary
Financial performance is pressured: profitability deteriorated sharply with large losses in 2024–2025 and negative ROE alongside high leverage and declining equity. The main offset is improved 2025 operating and free cash flow, which supports near-term liquidity but has been inconsistent historically.Income Statement
Profitability has deteriorated meaningfully: net income swung from solid profits in 2022–2023 to large losses in 2024 and 2025 (annual net margin moved from strongly positive to deeply negative). Revenue has also been volatile, including a sharp decline in 2024 followed by an outsized rebound in 2025, which signals an unstable earnings profile. A positive in 2025 is that operating profitability (as reflected by EBIT/EBITDA margins provided) appears relatively strong versus revenue, but the bottom line remains firmly negative, indicating significant non-operating costs, credit-related impacts, or other below-the-line pressure.34
Negative
Balance Sheet
Leverage remains high, which is typical for mortgage REITs but still a key risk factor: debt-to-equity has stayed elevated (roughly ~2.8x to ~6.2x historically) and is ~3.8x in 2025. Equity has declined from 2023 to 2025, and returns on equity turned sharply negative in 2024–2025, reflecting capital erosion from losses. On the positive side, total debt has trended modestly lower since 2022, suggesting some balance sheet de-risking, but the company still operates with limited cushion if asset values or funding costs move against it.38
Negative
Cash Flow
Cash flow is a relative bright spot recently: operating cash flow and free cash flow were strong and positive in 2025 and improved versus the prior year. However, cash generation has been inconsistent across the period (negative operating cash flow in 2021 and 2024, and a very large negative free cash flow in 2021), which reduces confidence in durability. The combination of negative net income with positive free cash flow in 2025 is helpful for liquidity, but it also suggests earnings quality is uneven and should be monitored.57
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 499.47M | 27.35M | 389.94M | 383.33M | 296.34M |
| Gross Profit | 437.87M | 27.35M | 389.94M | 383.33M | 296.34M |
| EBITDA | 214.38M | 0.00 | 0.00 | 0.00 | 0.00 |
| Net Income | -228.91M | -435.75M | 339.45M | 194.26M | 157.74M |
Balance Sheet | |||||
| Total Assets | 7.77B | 10.14B | 12.44B | 11.62B | 9.53B |
| Cash, Cash Equivalents and Short-Term Investments | 247.59M | 143.80M | 148.27M | 281.68M | 229.53M |
| Total Debt | 5.86B | 6.04B | 7.24B | 9.34B | 7.92B |
| Total Liabilities | 6.12B | 8.21B | 9.79B | 9.72B | 8.25B |
| Stockholders Equity | 1.55B | 1.84B | 2.55B | 1.80B | 1.28B |
Cash Flow | |||||
| Free Cash Flow | -203.48M | -51.22M | 33.07M | 359.15M | -3.74B |
| Operating Cash Flow | -203.48M | -51.22M | 33.07M | 359.15M | -34.44M |
| Investing Cash Flow | 2.28B | 1.86B | 1.04B | -1.56B | -1.72B |
| Financing Cash Flow | -2.04B | -1.88B | -1.09B | 1.17B | 1.88B |
Ready Capital Technical Analysis
Negative
1.87
Price Trends
2.02
Negative
2.36
Negative
3.20
Negative
Market Momentum
-0.03
Negative
46.82
Neutral
55.00
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 1.87 is above the 20-day moving average (MA) of 1.82, below the 50-day MA of 2.02, and below the 200-day MA of 3.20, indicating a neutral trend. The MACD of -0.03 indicates Negative momentum. The RSI at 46.82 is Neutral, neither overbought nor oversold. The STOCH value of 55.00 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
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% | |
61 Neutral | $697.81M | 2.71 | 13.26% | 16.08% | -53.20% | 97.96% | |
59 Neutral | $651.12M | 11.32 | 5.52% | 10.48% | -10.86% | -5.90% | |
49 Neutral | $304.58M | -1.57 | -12.90% | 26.82% | -43.56% | -166.72% | |
49 Neutral | $453.99M | -11.67 | -3.80% | 11.33% | -24.37% | -19.19% | |
45 Neutral | $80.86M | -1.19 | -7.12% | 7.97% | -28.13% | 62.49% | |
43 Neutral | $347.74M | -0.88 | -19.24% | ― | -65.32% | -325.73% |
* Real Estate Sector Average
RC
Ready Capital
1.87
-2.79
-59.84%
IVR
Invesco Mortgage
8.38
1.50
21.71%
KREF
Kkr Real Estate Finance
7.02
-3.02
-30.08%
GPMT
Granite Point Mortgage
1.70
-0.84
-33.18%
TRTX
Tpg Re Finance
8.31
0.72
9.49%
CMTG
Claros Mortgage Trust
2.48
-0.94
-27.49%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.