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Here's Why You Should Retain Rithm Capital (RITM) Stock for Now
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Rithm Capital Corp. (RITM - Free Report) is set to grow on increasing net servicing revenues and interest income. The company's strategic investments in consumer loan portfolios are anticipated to yield attractive returns. The growing profitability of its Newrez business positions the company favorably to navigate through a challenging environment.
Rithm Capital — with a market cap of $5.3 billion — is an asset manager specializing in the real estate and financial services sectors. Based in New York, the company aligns its operations to meet the criteria for qualification as a Real Estate Investment Trust for federal income tax purposes. With solid prospects, this Zacks Rank #3 (Hold) stock is deemed worthwhile for holding on to at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for Rithm Capital’s 2023 earnings is pegged at $1.93 per share, which indicates a 47.3% increase from a year ago. During the past 60 days, it has witnessed three upward estimate revisions and no downward movements. The company beat earnings estimates in all the last four quarters, the average surprise being 44%.
The consensus estimate for 2023 revenues is pegged at $3.8 billion, suggesting 18% year-over-year growth. The Zacks Consensus Estimate for current year interest income predicts a 55.9% increase from a year ago, which will likely support the top-line growth. The high interest rate environment continues to benefit the company’s MSR portfolio.
The company’s asset management business expansion has tremendous growth potential ahead. Its evolving business enables the company to maintain its dividend performance. Its dividend yield of 9.1% is much higher than the industry average of 2.1%. It paid $120.8 million to its shareholders in the form of dividends in the third quarter of 2023.
Its inorganic growth strategy enables it to prudently expand its portfolio. Its recent acquisition of Sculptor has created a superior asset management business and strengthened Rithm Capital’s position as an alternative asset manager. The buyout is also expected to enhance the company’s private capital platform and fundraising capabilities.
Through its inorganic growth strategy, Rithm Capital strategically expands its portfolio. The recent acquisition of Sculptor has elevated its asset management business, strengthening Rithm Capital's standing as an alternative asset manager. This acquisition is poised to strengthen the company's private capital platform and bolster its fundraising capabilities.
Shares of the company have jumped 29.5% in the past year compared with the industry’s 15.6% growth.
Key Concerns
There are a few factors that can hold the stock back.
Rithm Capital exited the third quarter with cash and cash equivalents of $1.2 billion, which decreased 8.9% from the 2022-end level. On the other hand, debt amounted to $24.1 billion, up 10.1% from the figure as of Dec 31, 2022. It has a total debt-to-total capital ratio of 77.9% at the third quarter-end, way above the industry average of 55.4%. The company's elevated leverage ratio raises concerns.
Also, in the trailing 12-month period, RITM experienced a 73.7% decline in free cash flow to $1.8 billion. Nevertheless, we believe that a systematic and strategic plan of action will drive the company’s long-term growth.
Key Picks
Meanwhile, investors interested in the broader Finance space may look at players like Blue Owl Capital Corporation (OBDC - Free Report) , Burford Capital Limited (BUR - Free Report) and Globe Life Inc. (GL - Free Report) . While Blue Owl Capital currently sports a Zacks Rank #1 (Strong Buy) at present, Burford Capital and Globe Life carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus mark for Blue Owl Capital’s current year earnings is pegged at $1.91 per share, indicating 35.5% year-over-year growth. Furthermore, the consensus estimate for OBDC’s revenues in 2023 suggests 30.4% year-over-year growth.
The Zacks Consensus Estimate for Burford Capital’s current year earnings has improved 16% over the past 60 days. Also, the consensus mark for BUR’s revenues in the current year is pegged at $936 million, suggesting 193.2% year-over-year growth.
The Zacks Consensus Estimate for Globe Life’s current year earnings is pegged at $10.60 per share, which indicates 30.1% year-over-year growth. It has witnessed two upward estimate revisions against none in the opposite direction in the past 60 days. It beat earnings estimates in all the past four quarters, with an average surprise of 2.3%.
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Here's Why You Should Retain Rithm Capital (RITM) Stock for Now
Rithm Capital Corp. (RITM - Free Report) is set to grow on increasing net servicing revenues and interest income. The company's strategic investments in consumer loan portfolios are anticipated to yield attractive returns. The growing profitability of its Newrez business positions the company favorably to navigate through a challenging environment.
Rithm Capital — with a market cap of $5.3 billion — is an asset manager specializing in the real estate and financial services sectors. Based in New York, the company aligns its operations to meet the criteria for qualification as a Real Estate Investment Trust for federal income tax purposes. With solid prospects, this Zacks Rank #3 (Hold) stock is deemed worthwhile for holding on to at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for Rithm Capital’s 2023 earnings is pegged at $1.93 per share, which indicates a 47.3% increase from a year ago. During the past 60 days, it has witnessed three upward estimate revisions and no downward movements. The company beat earnings estimates in all the last four quarters, the average surprise being 44%.
Rithm Capital Corp. Price and EPS Surprise
Rithm Capital Corp. price-eps-surprise | Rithm Capital Corp. Quote
The consensus estimate for 2023 revenues is pegged at $3.8 billion, suggesting 18% year-over-year growth. The Zacks Consensus Estimate for current year interest income predicts a 55.9% increase from a year ago, which will likely support the top-line growth. The high interest rate environment continues to benefit the company’s MSR portfolio.
The company’s asset management business expansion has tremendous growth potential ahead. Its evolving business enables the company to maintain its dividend performance. Its dividend yield of 9.1% is much higher than the industry average of 2.1%. It paid $120.8 million to its shareholders in the form of dividends in the third quarter of 2023.
Its inorganic growth strategy enables it to prudently expand its portfolio. Its recent acquisition of Sculptor has created a superior asset management business and strengthened Rithm Capital’s position as an alternative asset manager. The buyout is also expected to enhance the company’s private capital platform and fundraising capabilities.
Through its inorganic growth strategy, Rithm Capital strategically expands its portfolio. The recent acquisition of Sculptor has elevated its asset management business, strengthening Rithm Capital's standing as an alternative asset manager. This acquisition is poised to strengthen the company's private capital platform and bolster its fundraising capabilities.
Shares of the company have jumped 29.5% in the past year compared with the industry’s 15.6% growth.
Key Concerns
There are a few factors that can hold the stock back.
Rithm Capital exited the third quarter with cash and cash equivalents of $1.2 billion, which decreased 8.9% from the 2022-end level. On the other hand, debt amounted to $24.1 billion, up 10.1% from the figure as of Dec 31, 2022. It has a total debt-to-total capital ratio of 77.9% at the third quarter-end, way above the industry average of 55.4%. The company's elevated leverage ratio raises concerns.
Also, in the trailing 12-month period, RITM experienced a 73.7% decline in free cash flow to $1.8 billion. Nevertheless, we believe that a systematic and strategic plan of action will drive the company’s long-term growth.
Key Picks
Meanwhile, investors interested in the broader Finance space may look at players like Blue Owl Capital Corporation (OBDC - Free Report) , Burford Capital Limited (BUR - Free Report) and Globe Life Inc. (GL - Free Report) . While Blue Owl Capital currently sports a Zacks Rank #1 (Strong Buy) at present, Burford Capital and Globe Life carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus mark for Blue Owl Capital’s current year earnings is pegged at $1.91 per share, indicating 35.5% year-over-year growth. Furthermore, the consensus estimate for OBDC’s revenues in 2023 suggests 30.4% year-over-year growth.
The Zacks Consensus Estimate for Burford Capital’s current year earnings has improved 16% over the past 60 days. Also, the consensus mark for BUR’s revenues in the current year is pegged at $936 million, suggesting 193.2% year-over-year growth.
The Zacks Consensus Estimate for Globe Life’s current year earnings is pegged at $10.60 per share, which indicates 30.1% year-over-year growth. It has witnessed two upward estimate revisions against none in the opposite direction in the past 60 days. It beat earnings estimates in all the past four quarters, with an average surprise of 2.3%.