Rocket Companies Inc. will report its second-quarter earnings for 2021 later today, amid reports by other publicly traded, independent mortgage lenders that have so far shown significant losses.
In the past week, loanDepot Inc. and Home Point Capital, among others, have reported losses in the second quarter, a dramatic turn from substantial profits in both the first quarter of this year and the second quarter of last year.
Richard Roque, Ph.D., managing director of Menlo Co., a boutique mortgage investment banking firm in Wilbraham, Mass., said he expects results for most publicly traded, independent mortgage lenders in the quarter to be painful, potentially even forcing cuts to staff and infrastructure.
However, he viewed Rocket Companies as a potential exception, because of the diversity of its products and services.
Zacks Equity Research, meanwhile, said this week its consensus estimate for Rocket's revenues for the second quarter is $2.8 billion. It also said operating performance "is likely to have benefitted the bottom line," and pegged the consensus earnings estimate at 46 cents per share.
Still, Zacks said its model "does not conclusively predict" that Rocket's earnings will beat the estimate.
Here's a couple of things to look for when the earnings report is released after the stock markets close this afternoon:
- Gain-on-sale margins: When lenders sell their loans, the gain-on-sale margin is the difference between what it cost them to make the loan and the return from the sale to another lender. Both loanDepot and Home Point took a beating in their gain-on-sale margins in the second quarter.
- Did Rocket's other, non-mortgage products and services offset its mortgage-related results?
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