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Rithm Capital (RITM) Rises 39.2% in a Year: More Growth Ahead?
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Rithm Capital Corp. (RITM - Free Report) shares have jumped 39.2% in the past year. The stock has outperformed the industry’s 20% increase, the 24.3% growth of the Finance sector and the 27.1% rise of the S&P 500 Index. Based in New York, Rithm Capital is an asset manager specializing in the real estate and financial services sectors.Ithas a market cap of $5.3 billion.
Its asset management business expansion and continuous acquisition of customer loans are aiding the company. Its diversified platform and focus on growing profitability of its Newrez business is buoyingits performance. These factors are collectively contributing to this Zacks Rank #1 (Strong Buy) company's notable price appreciation. You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
Can RITM Retain Momentum?
The ingredients are there, and now let’s get into the details and show you how its estimates for the coming days stand.
The Zacks Consensus Estimate for Rithm Capital’s 2024 full-year earnings is pegged at $1.69 per share. The estimate increased by 2 cents over the past week. The company beat earnings estimates in each of the last four quarters, with an average surprise of 52%.
The consensus mark for full-year 2024 revenues stands at $4.4 billion, which suggests a 21.5% rise from the prior-year reported number. The high interest rate environment continues to benefit its MSR portfolio.
The Zacks Consensus Estimate for current year interest income predicts a 9.9% increase from a year ago, which will likely support the topline growth. Moreover, the consensus mark for net servicing revenues indicates a 4.1% year-over-year increase in 2024.
Rithm Capital’s evolving business enables the company to maintain its dividend performance. Its dividend yield of 9.2% is significantly higher than the industryaverage of 2.2%. It paid $483.2 million to its shareholders in the form of dividends last year.
With alternative asset space gaining popularity, RITM is expected to witness growing demand for its services. The Sculptor acquisition is elevating its asset management business and expanding its capabilities. Its deal with fellow REIT Great Ajax suggests that it is heading in the right direction.
Its Newrez business had a return on equity of 19% and continues to aid its performance. Its diversified approach helps the company in client growth as well as retention. RITM’s servicing platform is reaping the rewards of scale efficiencies and ongoing technological investments.
Risks
Despite the upside potential, there are a few factors that investors should keep an eye on.
Rithm Capital exited the fourth quarter with cash and cash equivalents of $1.29 billion, which decreased from the 2022-end level of $1.33 billion. On the other hand, debt amounted to $24 billion, up from the $21.9 billion figure as of Dec 31, 2022. It has a total debt-to-total capital ratio of 78.4% at the fourth quarter-end, way above the industry average of 57.9%.
Moreover, in the trailing 12-month period, RITM experienced an 84% decline in free cash flow to $1.1 billion. Nevertheless, we believe that a systematic and strategic plan of action will drive its long-term growth.
Other Key Picks
Some other top-ranked stocks in the broader Finance space are Coinbase Global, Inc. (COIN - Free Report) , Burford Capital Limited (BUR - Free Report) and American Express Company (AXP - Free Report) . While Coinbase Global and Burford Capital sport a Zacks Rank #1 each at present, American Express carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Coinbase’s current-year earnings implies a 462.2% year-over-year surge. It has witnessed five upward estimate revisions against none in the opposite direction during the past month. COIN beat earnings estimates in each of the past four quarters, with an average surprise of 377.6%.
The Zacks Consensus Estimate for Burford Capital’s 2024 full-year earnings is pegged at $2.04 per share, which increased by 2 cents in the past month. It beat earnings estimates twice in the past four quarters and missed on the other occasions, with an average surprise of 113.4%. The consensus mark for BUR’s revenues in full-year 2024 is pegged at $882 million.
The consensus mark for American Express’ current-year earnings is pegged at $12.84 per share, which indicates 14.5% year-over-year growth. AXP beat earnings estimates in two of the past four quarters and missed on other occasions, with an average surprise of 1.1%. The consensus mark for its current-year revenues is pegged at $66.2 billion, up 9.4% from a year ago.
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Rithm Capital (RITM) Rises 39.2% in a Year: More Growth Ahead?
Rithm Capital Corp. (RITM - Free Report) shares have jumped 39.2% in the past year. The stock has outperformed the industry’s 20% increase, the 24.3% growth of the Finance sector and the 27.1% rise of the S&P 500 Index. Based in New York, Rithm Capital is an asset manager specializing in the real estate and financial services sectors.Ithas a market cap of $5.3 billion.
Its asset management business expansion and continuous acquisition of customer loans are aiding the company. Its diversified platform and focus on growing profitability of its Newrez business is buoyingits performance. These factors are collectively contributing to this Zacks Rank #1 (Strong Buy) company's notable price appreciation. You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
Can RITM Retain Momentum?
The ingredients are there, and now let’s get into the details and show you how its estimates for the coming days stand.
The Zacks Consensus Estimate for Rithm Capital’s 2024 full-year earnings is pegged at $1.69 per share. The estimate increased by 2 cents over the past week. The company beat earnings estimates in each of the last four quarters, with an average surprise of 52%.
The consensus mark for full-year 2024 revenues stands at $4.4 billion, which suggests a 21.5% rise from the prior-year reported number. The high interest rate environment continues to benefit its MSR portfolio.
The Zacks Consensus Estimate for current year interest income predicts a 9.9% increase from a year ago, which will likely support the topline growth. Moreover, the consensus mark for net servicing revenues indicates a 4.1% year-over-year increase in 2024.
Rithm Capital’s evolving business enables the company to maintain its dividend performance. Its dividend yield of 9.2% is significantly higher than the industryaverage of 2.2%. It paid $483.2 million to its shareholders in the form of dividends last year.
With alternative asset space gaining popularity, RITM is expected to witness growing demand for its services. The Sculptor acquisition is elevating its asset management business and expanding its capabilities. Its deal with fellow REIT Great Ajax suggests that it is heading in the right direction.
Its Newrez business had a return on equity of 19% and continues to aid its performance. Its diversified approach helps the company in client growth as well as retention. RITM’s servicing platform is reaping the rewards of scale efficiencies and ongoing technological investments.
Risks
Despite the upside potential, there are a few factors that investors should keep an eye on.
Rithm Capital exited the fourth quarter with cash and cash equivalents of $1.29 billion, which decreased from the 2022-end level of $1.33 billion. On the other hand, debt amounted to $24 billion, up from the $21.9 billion figure as of Dec 31, 2022. It has a total debt-to-total capital ratio of 78.4% at the fourth quarter-end, way above the industry average of 57.9%.
Moreover, in the trailing 12-month period, RITM experienced an 84% decline in free cash flow to $1.1 billion. Nevertheless, we believe that a systematic and strategic plan of action will drive its long-term growth.
Other Key Picks
Some other top-ranked stocks in the broader Finance space are Coinbase Global, Inc. (COIN - Free Report) , Burford Capital Limited (BUR - Free Report) and American Express Company (AXP - Free Report) . While Coinbase Global and Burford Capital sport a Zacks Rank #1 each at present, American Express carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Coinbase’s current-year earnings implies a 462.2% year-over-year surge. It has witnessed five upward estimate revisions against none in the opposite direction during the past month. COIN beat earnings estimates in each of the past four quarters, with an average surprise of 377.6%.
The Zacks Consensus Estimate for Burford Capital’s 2024 full-year earnings is pegged at $2.04 per share, which increased by 2 cents in the past month. It beat earnings estimates twice in the past four quarters and missed on the other occasions, with an average surprise of 113.4%. The consensus mark for BUR’s revenues in full-year 2024 is pegged at $882 million.
The consensus mark for American Express’ current-year earnings is pegged at $12.84 per share, which indicates 14.5% year-over-year growth. AXP beat earnings estimates in two of the past four quarters and missed on other occasions, with an average surprise of 1.1%. The consensus mark for its current-year revenues is pegged at $66.2 billion, up 9.4% from a year ago.