We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can Rithm Capital Navigate Lower Servicing Revenues in Q3 Earnings?
Read MoreHide Full Article
Rithm Capital Corp. (RITM - Free Report) is set to report third-quarter 2024 results on Oct. 29, 2024, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at 43 cents per share on revenues of $1.11 billion.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
The third-quarter earnings estimate has remained stable over the past 60 days. The bottom-line projection indicates a year-over-year plunge of 25.9%. However, the Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 2.3%.
Image Source: Zacks Investment Research
For the current year, the Zacks Consensus Estimate for Rithm Capital’s revenues is pegged at $4.79 billion, implying a rise of 32.2% year over year. However, the consensus mark for current year EPS is pegged at $1.81, implying a fall of around 12.1% on a year-over-year basis.
Rithm Capital beat the consensus estimate in each of the last four quarters, with the average surprise being 36.3%.
However, our proven model does not conclusively predict an earnings beat for the company this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. That’s not the case here.
RITM has an Earnings ESP of -1.18% and a Zacks Rank #4 (Sell).
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Higher fees, interest income and multiple acquisitions are expected to have supported its revenue growth. The favorable interest rate environment is expected to have supported Rithm in generating enhanced returns from specific investments and consumer loans. The Zacks Consensus Estimate for third-quarter interest income indicates 2.3% year-over-year growth.
The growing profitability of its Newrez business is likely to have aided its Origination & Servicing segment. Also, the Zacks Consensus Estimate for third-quarter net gain on originated residential mortgage loans indicates a 12.6% year-over-year increase.
The above-mentioned factors are expected to have positioned the company for year-over-year growth in revenues. However, the consensus mark for net servicing revenues implies a 32.1% fall from the prior-year figure. The consensus mark for asset management revenues is pegged at $85.1 million, sequentially down from $109.4 million.
Also, the high interest rates are likely to have increased its interest expense and warehouse line fees in the quarter under review. Higher general and administrative expenses, compensation and benefits are likely to have increased total expenses, slashing profits. This makes an earnings beat uncertain. Nevertheless, its hedging strategies are likely to have provided some protection from the burden of increasing interest expenses.
RITM’s Price Performance
Rithm Capital's stock has declined 1.2% year to date, underperforming the industry’s growth of 9%. Some of its peers, like Annaly Capital Management, Inc. (NLY - Free Report) and AGNC Investment Corp. (AGNC - Free Report) ,have gained 0.8% and 1.7%, respectively, during this time. All these stocks have lagged the S&P 500 significantly, which has rallied 21.5% during the same period.
Investors should monitor Rithm’s upcoming financial results to assess potential shifts in its price performance and overall outlook.
RITM’s YTD Price Performance
Image Source: Zacks Investment Research
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Can Rithm Capital Navigate Lower Servicing Revenues in Q3 Earnings?
Rithm Capital Corp. (RITM - Free Report) is set to report third-quarter 2024 results on Oct. 29, 2024, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at 43 cents per share on revenues of $1.11 billion.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
The third-quarter earnings estimate has remained stable over the past 60 days. The bottom-line projection indicates a year-over-year plunge of 25.9%. However, the Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 2.3%.
For the current year, the Zacks Consensus Estimate for Rithm Capital’s revenues is pegged at $4.79 billion, implying a rise of 32.2% year over year. However, the consensus mark for current year EPS is pegged at $1.81, implying a fall of around 12.1% on a year-over-year basis.
Rithm Capital beat the consensus estimate in each of the last four quarters, with the average surprise being 36.3%.
Rithm Capital Corp. Price and EPS Surprise
Rithm Capital Corp. price-eps-surprise | Rithm Capital Corp. Quote
Q3 Earnings Whispers for RITM
However, our proven model does not conclusively predict an earnings beat for the company this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. That’s not the case here.
RITM has an Earnings ESP of -1.18% and a Zacks Rank #4 (Sell).
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
What’s Shaping RITM’s Q3 Results?
Higher fees, interest income and multiple acquisitions are expected to have supported its revenue growth. The favorable interest rate environment is expected to have supported Rithm in generating enhanced returns from specific investments and consumer loans. The Zacks Consensus Estimate for third-quarter interest income indicates 2.3% year-over-year growth.
The growing profitability of its Newrez business is likely to have aided its Origination & Servicing segment. Also, the Zacks Consensus Estimate for third-quarter net gain on originated residential mortgage loans indicates a 12.6% year-over-year increase.
The above-mentioned factors are expected to have positioned the company for year-over-year growth in revenues. However, the consensus mark for net servicing revenues implies a 32.1% fall from the prior-year figure. The consensus mark for asset management revenues is pegged at $85.1 million, sequentially down from $109.4 million.
Also, the high interest rates are likely to have increased its interest expense and warehouse line fees in the quarter under review. Higher general and administrative expenses, compensation and benefits are likely to have increased total expenses, slashing profits. This makes an earnings beat uncertain. Nevertheless, its hedging strategies are likely to have provided some protection from the burden of increasing interest expenses.
RITM’s Price Performance
Rithm Capital's stock has declined 1.2% year to date, underperforming the industry’s growth of 9%. Some of its peers, like Annaly Capital Management, Inc. (NLY - Free Report) and AGNC Investment Corp. (AGNC - Free Report) ,have gained 0.8% and 1.7%, respectively, during this time. All these stocks have lagged the S&P 500 significantly, which has rallied 21.5% during the same period.
Investors should monitor Rithm’s upcoming financial results to assess potential shifts in its price performance and overall outlook.
RITM’s YTD Price Performance