Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Mr. Cooper Group (NASDAQ: COOP) and the best and worst performers in the thrifts & mortgage finance industry.
Thrifts & Mortgage Finance institutions operate by accepting deposits and extending loans primarily for residential mortgages, earning revenue through interest rate spreads (difference between lending rates and borrowing costs) and origination fees. The industry benefits from demographic tailwinds as millennials enter prime homebuying age, technological advancements streamlining the loan approval process, and potential interest rate stabilization improving affordability. However, significant headwinds include net interest margin compression during rate volatility, increased competition from fintech disruptors offering digital-first experiences, mounting regulatory compliance costs, and potential housing market corrections that could impact loan portfolios and default rates.
The 18 thrifts & mortgage finance stocks we track reported a slower Q2. As a group, revenues missed analysts’ consensus estimates by 29.8% while next quarter’s revenue guidance was in line.
Thankfully, share prices of the companies have been resilient as they are up 5.8% on average since the latest earnings results.
Mr. Cooper Group (NASDAQ: COOP)
Born from the 2018 merger of Nationstar Mortgage and WMIH Corp, Mr. Cooper Group (NASDAQ: COOP) is a non-bank servicer of residential mortgage loans that collects payments, manages escrow funds, and performs loss mitigation activities for 4.6 million customers.
Mr. Cooper Group reported revenues of $608 million, up 18.2% year on year. This print fell short of analysts’ expectations by 10.5%. Overall, it was a disappointing quarter for the company with a significant miss of analysts’ tangible book value per share and EPS estimates.
Interestingly, the stock is up 19.6% since reporting and currently trades at $203.21.
Is now the time to buy Mr. Cooper Group? Access our full analysis of the earnings results here, it’s free.
Best Q2: Ellington Financial (NYSE: EFC)
Operating under the guidance of Ellington Management Group, a respected name in structured credit markets, Ellington Financial (NYSE: EFC) acquires and manages a diverse portfolio of mortgage-related, consumer-related, and other financial assets to generate returns for investors.
Ellington Financial reported revenues of $92.54 million, up 1.5% year on year, outperforming analysts’ expectations by 11.5%. The business had a stunning quarter with a solid beat of analysts’ tangible book value per share estimates and EPS in line with analysts’ estimates.
The market seems happy with the results as the stock is up 7.7% since reporting. It currently trades at $13.65.
Is now the time to buy Ellington Financial? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Franklin BSP Realty Trust (NYSE: FBRT)
Operating as a specialized real estate investment trust (REIT) with roots dating back to 2012, Franklin BSP Realty Trust (NYSE: FBRT) originates and manages a diversified portfolio of commercial real estate debt investments secured by properties in the United States and abroad.
Franklin BSP Realty Trust reported revenues of $50.78 million, up 171% year on year, falling short of analysts’ expectations by 8.9%. It was a disappointing quarter as it posted a significant miss of analysts’ net interest income estimates and a significant miss of analysts’ EPS estimates.
Interestingly, the stock is up 10.6% since the results and currently trades at $11.16.
Read our full analysis of Franklin BSP Realty Trust’s results here.
Walker & Dunlop (NYSE: WD)
Originating as a small mortgage banking firm during the Great Depression in 1937, Walker & Dunlop (NYSE: WD) provides commercial real estate financing, property sales, appraisal, and investment management services with a focus on multifamily properties.
Walker & Dunlop reported revenues of $319.2 million, up 17.9% year on year. This number surpassed analysts’ expectations by 17.1%. It was an exceptional quarter as it also produced an impressive beat of analysts’ net interest income estimates and EPS in line with analysts’ estimates.
Walker & Dunlop achieved the biggest analyst estimates beat among its peers. The stock is up 12.1% since reporting and currently trades at $84.61.
Read our full, actionable report on Walker & Dunlop here, it’s free.
Rocket Companies (NYSE: RKT)
Born in Detroit during the 1980s and evolving into a tech-driven financial powerhouse, Rocket Companies (NYSE: RKT) is a fintech company that provides digital mortgage lending, real estate services, and personal finance solutions through its technology platform.
Rocket Companies reported revenues of $1.36 billion, up 10.8% year on year. This print beat analysts’ expectations by 5.8%. Overall, it was a very strong quarter as it also logged EPS in line with analysts’ estimates and a solid beat of analysts’ tangible book value per share estimates.
The stock is up 33.2% since reporting and currently trades at $19.67.
Read our full, actionable report on Rocket Companies here, it’s free.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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