Shares of Rocket Companies gained 6.8% in Thursday's extended trading after the online mortgage and financial services company reported stellar fourth-quarter results. The company's board also approved a special dividend to its shareholders.
Rocket Companies (RKT) reported adjusted earnings of $1.14 per share, which exceeded the Street's estimates of $0.87 per share. The company's adjusted net income spiked 350% year-over-year to $2.23 billion while 4Q revenues jumped 144% to $4.78 billion and outpaced consensus estimates of $3.92 billion.
The company's closed loan origination volume of $107.2 billion grew 111% year-over-year in 4Q, while net rate lock volume of $96.0 billion increased 119% during the quarter.
As for 1Q, the company expects closed loan volume in the range of $98-$103 billion, which represents a year-over-year growth of 90% to 99%. Furthermore, it projects net rate lock volume in the range of $88-$95 billion, which represents year-over-year growth of 57% to 70%.
The company's CEO Jay Farner said, "As a result of our highly profitable and capital light business model, I'm excited to announce that the Board of Directors has approved a significant special dividend of $1.11 per share." The special dividend, which will be fully funded through its cash distributions of about $2.2 billion, will be paid on Mar. 23 to shareholders of record as of Mar. 9. (See Rocket Companies stock analysis on TipRanks)
Meanwhile, J.P. Morgan analyst Richard Shane downgraded the stock to Sell from Buy on Jan. 19, and lowered his price target to $20 from $26. Shane believes that RKT stock is fully priced at current levels and told investors that he is "increasingly cautious" on the mortgage sector, as a rise in interest rates may hurt volumes and margins.
Overall, the Street has a cautious outlook on the stock, with a Hold consensus rating based on 1 Hold, 1 Buy and 2 Sells. The average analyst price target of $22.63 implies upside potential of about 14% to current levels.
Furthermore, TipRanks' stock investors tool shows that investors currently have a Very Negative stance on RKT.
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