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Rocket Companies (RKT)
NYSE:RKT
US Market

Rocket Companies (RKT) AI Stock Analysis

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Rocket Companies

(NYSE:RKT)

Rating:56Neutral
Price Target:
$14.50
▲(5.38%Upside)
Rocket Companies is navigating a challenging financial landscape with declining revenues and profitability pressures. However, technical indicators show positive momentum, and the earnings call highlights strong strategic initiatives and AI integration that enhance growth prospects. Valuation remains a concern due to negative earnings, but strategic acquisitions could provide long-term value.
Positive Factors
Growth Opportunities
The inclusion of a merger model reflects potential growth opportunities from recent acquisitions.
Strategic Acquisitions
The overlap of Mr. Cooper and Rocket Companies makes operational sense, potentially leading to uplift in recapture rates and straightforward expense synergies.
Negative Factors
Investor Concerns
Investors are worried about Rocket Companies' willingness to use its stock for large mergers and acquisitions.
Market Conditions
Unfavorable market conditions are influencing a neutral rating on Rocket Companies.

Rocket Companies (RKT) vs. SPDR S&P 500 ETF (SPY)

Rocket Companies Business Overview & Revenue Model

Company DescriptionRocket 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 MoneyRocket Companies primarily generates revenue through its mortgage origination and servicing operations. The company earns fees from originating new mortgages, which are subsequently sold to investors in the secondary market. Additionally, Rocket Companies generates income from the servicing of these loans, earning fees for managing the day-to-day operations of the mortgage accounts, including collecting payments and handling escrow accounts. The company also benefits from interest income on loans held for sale and gains on the sale of loans. Strategic partnerships and marketing agreements with real estate brokers and other financial institutions further bolster its revenue streams.

Rocket Companies Key Performance Indicators (KPIs)

Any
Any
Revenue by Segment
Revenue by Segment
Analyzes revenue from different business segments, highlighting which areas drive growth and profitability, and revealing strategic focus and potential vulnerabilities.
Chart InsightsRocket Companies is experiencing a rebound in 'Sale of Loans' revenue, driven by strategic acquisitions and AI-driven efficiencies, despite previous declines. The 'Interest' segment shows steady growth, reflecting effective cost management. However, 'Change in Value of MSRs' remains volatile, posing a risk. The earnings call highlights strong Q1 2025 results and optimism about future growth, despite market volatility impacting consumer sentiment. Strategic acquisitions like Redfin and Mr. Cooper are expected to bolster their integrated platform, potentially mitigating risks and enhancing revenue stability.
Data provided by:Main Street Data

Rocket Companies Earnings Call Summary

Earnings Call Date:May 08, 2025
(Q1-2025)
|
% Change Since: 18.11%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
Rocket Companies delivered strong Q1 results with significant achievements in AI integration, strategic acquisitions, and growth in home equity loans. However, the company faced challenges due to April's market volatility, which impacted consumer sentiment and purchase applications. Despite these challenges, the company remains optimistic about future growth and integration efforts.
Q1-2025 Updates
Positive Updates
Strong Q1 2025 Performance
Rocket Companies reported $1.3 billion in adjusted revenue, at the high end of guidance, and $0.04 in adjusted diluted EPS. The company served 21% more origination clients in March compared to March 2023, and reduced turn times by 14%.
Innovative Use of AI
AI initiatives such as Agentic AI and call analysis tools have significantly improved productivity, with an estimated 50% reduction in remediation costs and projected savings of over $1 million in 2025. These innovations have enabled a 50% increase in clients served per production team member.
Strategic Acquisitions
Announced acquisitions of Redfin and Mr. Cooper aim to transform Rocket's business model by integrating real estate search, origination scale, and servicing strength into an end-to-end homeownership platform.
Growth in Home Equity Loans
Rocket Companies experienced a 17% year-over-year increase in net rate lock volume, driven by growth in refinance and home equity loan offerings.
Negative Updates
April Market Volatility
April saw a sharp reversal in housing market momentum due to global tariff announcements, leading to increased volatility in stock and bond markets. Mortgage rates climbed back to nearly 7%, causing a decline in consumer sentiment and purchase applications.
Challenges in Purchase Market
The spring home buying season started slower than expected, with April purchase application data declining to the lowest level since February. This was attributed to market volatility and consumer concerns about job security and affordability.
Decreased Gain on Sale Margin
The gain on sale margin decreased to 289 basis points in Q1 2025, compared to 311 basis points in the same period last year, and 298 basis points in the prior quarter.
Company Guidance
During the Rocket Companies First Quarter 2025 Earnings Call, the company provided a robust set of metrics reflecting their performance and future outlook. The company reported $1.3 billion in adjusted revenue, which was at the high end of their guidance, and achieved $0.04 in adjusted diluted EPS. They saw a 21% increase in origination clients in March compared to March 2023 and reduced turn times by 14%. Rocket Companies reported serving 50% more clients per production team member compared to March 2023. Additionally, the company noted a significant impact from their AI initiatives, such as a 50% reduction in remediation costs through an AI tool and a projected $1 million cost saving in 2025. The call also highlighted strategic acquisitions planned to enhance their integrated homeownership platform, including acquisitions of Redfin and Mr. Cooper, which are expected to strengthen their business model and expand their data and ecosystem partnerships.

Rocket Companies Financial Statement Overview

Summary
Rocket Companies is facing financial challenges with declining revenues and profitability. Despite high gross profit margins, the company's leverage and negative cash flow pose significant risks, requiring strategic adjustments to improve financial stability.
Income Statement
45
Neutral
Rocket Companies has faced significant revenue challenges with a decline from $13.18 billion in 2021 to $5.07 billion TTM, indicating a sharp contraction. Gross profit margins remain high at over 90%, showcasing pricing power. However, net income margins have dwindled, with a TTM net income of only $2.77 million, indicating profitability pressures.
Balance Sheet
50
Neutral
The company has a high debt-to-equity ratio, reflecting considerable leverage and potential financial risk. However, equity has been relatively stable. Asset quality is a concern given the high levels of liabilities relative to equity. Stockholders' equity has shown volatility, which can pose risks under adverse conditions.
Cash Flow
40
Negative
Negative free cash flow in the TTM period highlights cash management challenges. The company had a negative operating cash flow of $413 million TTM, suggesting operational inefficiencies. Large capital expenditures relative to operating cash flow have further strained liquidity.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
5.07B5.40B4.01B6.00B13.18B15.90B
Gross Profit
4.59B4.93B3.65B5.68B12.68B15.46B
EBIT
146.58M668.05M-402.90M741.91M6.18B9.53B
EBITDA
259.39M780.97M-292.63M835.93M6.26B9.61B
Net Income Common Stockholders
2.77M29.37M-15.51M46.42M308.21M197.95M
Balance SheetCash, Cash Equivalents and Short-Term Investments
4.17B4.06B1.14B722.29M2.13B1.97B
Total Assets
25.25B24.51B19.23B20.08B32.77B37.53B
Total Debt
14.80B13.98B9.56B8.71B19.26B21.95B
Net Debt
13.39B12.70B8.43B7.98B17.13B19.98B
Total Liabilities
16.67B15.47B10.93B11.61B23.02B29.65B
Stockholders Equity
583.97M702.50M624.90M576.70M665.66M490.50M
Cash FlowFree Cash Flow
-1.26B-3.43B49.99M10.72B7.44B-1.78B
Operating Cash Flow
-413.52M-2.63B110.33M10.82B7.74B-1.68B
Investing Cash Flow
-455.66M-495.47M861.15M578.74M-664.85M517.20M
Financing Cash Flow
1.41B3.28B-623.56M-12.82B-6.92B1.76B

Rocket Companies Technical Analysis

Technical Analysis Sentiment
Positive
Last Price13.76
Price Trends
50DMA
12.72
Positive
100DMA
12.75
Positive
200DMA
13.72
Positive
Market Momentum
MACD
0.27
Negative
RSI
59.59
Neutral
STOCH
88.10
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RKT, the sentiment is Positive. The current price of 13.76 is above the 20-day moving average (MA) of 12.97, above the 50-day MA of 12.72, and above the 200-day MA of 13.72, indicating a bullish trend. The MACD of 0.27 indicates Negative momentum. The RSI at 59.59 is Neutral, neither overbought nor oversold. The STOCH value of 88.10 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RKT.

Rocket Companies Risk Analysis

Rocket Companies disclosed 63 risk factors in its most recent earnings report. Rocket Companies 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

Rocket Companies Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
69
Neutral
$9.16B16.2512.39%6.44%-7.86%
64
Neutral
$12.77B9.717.85%78.05%12.07%-7.97%
61
Neutral
$4.95B14.719.32%1.25%23.79%121.61%
57
Neutral
$973.59M22.543.71%3.19%42.92%64.72%
RKRKT
56
Neutral
$27.52B68.510.45%24.58%-88.86%
WDWD
49
Neutral
$2.32B23.435.62%3.92%6.68%6.08%
41
Neutral
$6.68B37.74-5.74%9.57%9.19%-171.38%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
RKT
Rocket Companies
13.76
-0.05
-0.36%
WD
Walker & Dunlop
68.32
-24.40
-26.32%
PFSI
PennyMac Financial
95.88
4.86
5.34%
COOP
Mr Cooper Group
143.08
60.38
73.01%
UWMC
UWM Holding
4.18
-2.77
-39.86%
GHLD
Guild Holdings
15.65
1.29
8.98%

Rocket Companies Corporate Events

Private Placements and FinancingM&A Transactions
Rocket Companies Announces $4 Billion Senior Notes Offering
Neutral
Jun 5, 2025

On June 3 and June 5, 2025, Rocket Companies announced and priced a private offering of $4 billion in senior notes due in 2030 and 2033. These notes will be guaranteed by Rocket Mortgage and its subsidiaries, and potentially by Redfin and Mr. Cooper upon their acquisitions. The proceeds will be used for redeeming existing notes, paying related fees, and repaying secured debt. The offering is not contingent on the acquisitions, but there are provisions for mandatory redemption if the Mr. Cooper acquisition is not completed by September 30, 2026.

The most recent analyst rating on (RKT) stock is a Hold with a $14.00 price target. To see the full list of analyst forecasts on Rocket Companies stock, see the RKT Stock Forecast page.

Executive/Board Changes
Rocket Companies Announces Board Size Reduction
Neutral
May 23, 2025

On May 20, 2025, Rocket Companies announced that Nancy Tellem decided not to stand for re-election as a Class II director, with her term ending on June 11, 2025. Following her departure, the Board decided to reduce its size to eight directors, effective upon the expiration of her term.

The most recent analyst rating on (RKT) stock is a Hold with a $18.00 price target. To see the full list of analyst forecasts on Rocket Companies stock, see the RKT Stock Forecast page.

Business Operations and Strategy
Rocket Companies Ends Credit Agreement with JPMorgan
Neutral
May 2, 2025

Rocket Companies terminated its Revolving Credit Agreement dated July 4, 2024, with JPMorgan Chase Bank, N.A., without incurring any early termination penalties or prepayment premiums. This move may impact the company’s financial strategy and liquidity management, potentially influencing its market positioning and stakeholder relations.

M&A TransactionsBusiness Operations and Strategy
Rocket Companies Announces Acquisition of Mr. Cooper Group
Positive
Mar 31, 2025

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.

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.