Earnings Release Is Rocket Companies A Buy?

 

Rocket Companies, Inc. (NYSE: RKT) (“Rocket Companies” or the “Company”), a Detroit-based holding company consisting of tech-driven real estate, mortgage and eCommerce businesses – including Rocket Mortgage, Amrock, Rocket Homes and Rocket Auto – today announced results for the quarter.

– Grew revenue, net to $4.6 billion, up 236% year-over-year

– Increased Adjusted Revenue to $4.0 billion, up 91% year-over-year¹

– Grew net income to $2.8 billion, up 28x year-over-year

– Increased Adjusted Net Income to $1.8 billion, up 170% year-over-year¹

First Quarter Highlights
During the first quarter of 2021, Rocket Companies:

  • Grew total revenue, net, for Rocket Companies to $4.6 billion from $1.4 billion in Q1 ’20 and Adjusted Revenue to $4.0 billion from $2.1 billion in Q1 ’20.
  • Increased net income to $2.8 billion from $0.1 billion in Q1 ’20 and Adjusted Net Income to $1.8 billion from $0.7 billion in Q1 ’20.
  • Generated closed loan origination volume of $103.5 billion and net rate lock volume of $95.1 billion in Q1 ’21, which represented improvements of 100% and 70%, respectively, as compared to Q1 ’20.
  • Q1 ’21 represented our strongest first quarter purchase closed loan volume in company history. In addition, we achieved our highest monthly purchase application volume ever in March 2021.
  • Increased gain on sale margin by 49 basis points year-over-year to 3.74%.
  • Amrock, our title insurance services, property valuation, and settlement services company, generated 348,800 closings, up 110% from Q1 ’20, representing the highest level of closings in Amrock’s history. This record volume was the primary driver for the increase in other income in Q1 ’21 to $466.1 million from $243.8 million in Q1 ’20.
  • Rocket Auto, our automotive retail marketplace, facilitated the sale of 13,600 auto units, up more than 5,300 units, or 65%, as compared to first quarter of 2020. Gross Merchandise Value for Q1 ’21 was $360 million, which represents an annualized run rate of more than $1 billion.

Highlights
Platform Reach

  • The Rocket Companies’ platform generated more than 60 million unique visitors during Q1 ’21, an increase of 72% as compared to Q1 ’20.
  • RocketHomes.com, our home search experience, average unique monthly visitors increased more than 300% in Q1 ’21 as compared to Q1 ’20.
  • Our net client retention rate was 91% over the 12 months ended March 31, 2021. There is a strong correlation between this metric and client lifetime value and we believe our net client retention rate is matched only by some of the best performing subscription business models in the world.
  • More than 45,000 real estate agents have signed up for Rocket Pro Insight (RPI), up more than 220% from 14,000 at December 31, 2020. RPI is our digital platform providing real estate agents with real-time updates on the status of their clients’ mortgages and the ability to assist in the mortgage process.
  • We recently made two exciting brand announcements. Rocket Pro TPO initiated a sponsorship of the #16 Chevrolet in the Indianapolis 500. This is the first-ever entrant in the Indianapolis 500 from a team that is female-owned, female driven and largely female crewed. Rocket Mortgage also launched a new partnership with PGA Tour superstar and the 2020 Rocket Mortgage Classic winner, Bryson DeChambeau.

Second Quarter 2021 Outlook
We expect the following ranges in Q2 2021:

  • Closed loan volume of between $82.5 billion and $87.5 billion.
  • Net rate lock volume of between $81.5 billion and $88.5 billion.
  • Gain on sale margins of 2.65% to 2.95%.

 

CWEB Analyst’s have initiated a BUY Rating for  Rocket Companies, Inc. (NYSE: RKT) and potential upside of $36 in 2021. The fundamentals of the company are to strong and even after the hard hit post pandemic recovery but numbers are really strong. We believe Q3 will beat expectations.

 

 

RKT


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