Rithm (RITM) closed the latest trading day at $11.42, indicating a -1.38% change from the previous session's end. The stock trailed the S&P 500, which registered a daily gain of 1.07%. Meanwhile, the Dow gained 0.31%, and the Nasdaq, a tech-heavy index, added 2.17%. Heading into today, shares of the real estate investment trust had gained 4.04% over the past month, lagging the Finance sector's gain of 4.06% and outpacing the S&P 500's gain of 2.92% in that time. The investment community will be paying close ...

Recent remarks from Federal Reserve Chairman Powell have me thinking interest rate cuts may finally be on the horizon. A core theme of the economy over the last couple of years is abnormally high inflation. While politicians are often criticized or cheered for the current state of the economy, the Federal Reserve is actually the institution responsible for setting monetary policy. In an effort to combat inflation, the Federal Reserve raised interest rates 11 times throughout 2022 and 2023. In finance jargon ...

Company Performance - Rithm (RITM) closed at $11.61, showing no change from the previous session, which was a narrower change compared to the S&P 500's daily loss of 0.3% [1] - In the past month, Rithm's shares gained 6.22%, matching the Finance sector's performance, while the S&P 500 gained 3.42% [1] Earnings Expectations - Analysts expect Rithm to report earnings of $0.43 per share, reflecting a year-over-year decline of 25.86% [2] - The Zacks Consensus Estimate for revenue is projected at $1.15 billion, which is an increase of 5.9% from the previous year [2] Full Year Projections - For the full year, analysts anticipate earnings of $1.82 per share and revenue of $4.82 billion, indicating changes of -11.65% and +33.25% respectively from last year [3] Analyst Forecast Revisions - Recent revisions to analyst forecasts for Rithm are important as they reflect changes in short-term business dynamics, with upward revisions indicating positive sentiment towards the company's operations [4] Valuation Metrics - Rithm is currently trading at a Forward P/E ratio of 6.39, which is a discount compared to the industry's average Forward P/E of 11.67 [7] - The Financial - Miscellaneous Services industry, part of the Finance sector, holds a Zacks Industry Rank of 72, placing it in the top 29% of over 250 industries [7]

Core Viewpoint - Rithm Capital Corp. (NYSE:RITM) has experienced a solid recovery, breaking to a new recent high, with four consecutive weeks of recovery before facing selling pressure [2] - The company is diversifying its business beyond its core MSR operations, aiming to improve its valuation multiples over time [2][3] - Rithm anticipates a further valuation re-rating as the market has not fully priced in the prospects of its new growth vectors [2][4] Business Diversification - Rithm has made significant progress in diversifying its business, becoming the second-largest nonbank servicer and the fifth-largest lender in the industry [3] - The company is expanding into Newrez's omnichannel platform, which is expected to enhance market share and drive origination growth [3] - The anticipated reduction in interest rates from September 2024 is expected to improve Rithm's spread and financing costs, supporting its core business [3][4] Financial Metrics and Valuation - Rithm's forward earnings available for distribution (EAD) are not likely to be significantly impacted by interest rate changes, as 96% of its MSRs are in-the-money as of Q2 [3] - The company's EAD multiple of 6.8x is below its 10-year average of 7x, indicating potential undervaluation [8] - Rithm's forward dividend yield of 8.5% remains attractive compared to the lowered 2-year yield of 3.76% [8] Market Sentiment and Stock Performance - The market sentiment appears optimistic, with dip-buyers defending the stock's upward bias, indicating confidence in Rithm's ongoing recovery [9] - Near-term consolidation may occur as the stock tests resistance under the $12 level, but this is not expected to lead to a decisive reversal in momentum [9] - The overall assessment suggests that Rithm's business diversification has not been significantly re-rated by the market, reflecting higher execution risks [8][9]

Core Insights - The article focuses on analyzing Rithm Capital Corp.'s (NYSE:RITM) recent performance and comparing its metrics with 19 mortgage real estate investment trust (mREIT) peers, highlighting the importance of understanding investment and derivatives portfolios in projecting future results [2][3]. Investment Composition and Performance - As of June 30, 2024, RITM's investment portfolio consisted of 25% fixed-rate agency MBS, 0% variable-rate agency MBS, and 34% allocated to MSR investments, with 41% in non-agency MBS and non-MBS holdings [8]. - RITM's on-balance sheet leverage ratio was 2.5x, while the at-risk leverage ratio was 1.8x, indicating a slight decrease in leverage during Q2 2024 [8]. - RITM's book value (BV) per share increased from $12.19 at the end of Q1 2024 to $12.39 at the end of Q2 2024, resulting in a quarterly economic return of 3.69% [8]. Economic Return and Valuation - RITM's trailing 24-month economic return of 17.18% was the highest among the covered mREIT peers, significantly outperforming the average returns of other classifications [21]. - As of September 2, 2024, RITM's stock price was $11.94, trading at a 2.93% discount to the estimated current BV of $12.30 [18]. Hedging and Risk Management - RITM's hedging coverage ratio was below the originator + servicer mREIT average as of June 30, 2024, indicating a strategy that typically outperforms in rising interest rate environments [23]. - The company has diversified its investment portfolio, which includes MSR and MSR-related assets, providing natural hedges against interest rate fluctuations [9][11]. Recent Acquisitions and Strategic Moves - RITM's acquisition of Sculptor Capital Management Inc. brought approximately $32 billion of investments under management, enhancing its diversification and asset management capabilities [10]. - The company has also taken over managerial duties for Great Ajax Corp., transitioning it towards commercial loans, which will provide additional exposure to commercial real estate [24].

JamesBrey Rithm Capital (NYSE:RITM) represents a promising high-yielding investment opportunity in the mortgage REIT business as the company supports its earnings available for distribution and is growing its business in new areas. Considering that the REIT delivered 1.88X distribution coverage in the second-quarter and that Rithm Capital's shares are undeservedly trading at an 11% discount to book value, I believe the risk profile for Rithm Capital is skewed to the upside. I am also upgrading my rating on ...

Shares of Rithm Capital Corp. (RITM) have declined 3.2% since it reported better-than-expected secondquarter 2024 results on Jul 31, 2024, before the opening bell. The quarterly results were supported by an improving performance in its Mortgage Loans Receivable business and solid Asset Management unit. Growth in interest income was a major tailwind in the second quarter. However, rising expenses partially offset the positives. Investors seem to be concerned about its declining servicing revenues, which is l ...

filo Rithm Capital Corporation (NYSE:RITM) continued to earn its $0.25 per share per quarter dividend easily with distributable earnings in the second quarter. Rithm Capital also grew its book value and disclosed solid financial results, driven by gains in the Mortgage Servicing Rights portfolio. I anticipate Rithm Capital to do more acquisitions moving forward, particularly in the asset management business, in order to diversify its mortgage-heavy investment portfolio and create new income streams. From a ...

Rithm Capital Corp. (NYSE:RITM) Q2 2024 Earnings Conference Call July 31, 2024 8:00 AM ET Company Participants Emma Bolla - Associate General Counsel Michael Nierenberg - Chairman, CEO and President Baron Silverstein - President, Newrez Conference Call Participants Eric Hagen - BTIG Bose George - KBW Stephen Laws - Raymond James Crispin Love - Piper Sandler Trevor Cranston - JMP Securities Operator Good morning and welcome to the Rithm Capital Second Quarter 2024 Earnings Call. All participants will be in l ...

Group 1: Company Overview - Rithm (RITM) reported quarterly earnings of $0.47 per share, exceeding the Zacks Consensus Estimate of $0.42 per share, but down from $0.62 per share a year ago, representing an earnings surprise of 11.90% [7] - The company posted revenues of $1.23 billion for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 8.78%, compared to year-ago revenues of $1.04 billion [8] - Rithm has surpassed consensus EPS estimates in all four of the last quarters and has topped consensus revenue estimates three times over the same period [8] Group 2: Earnings Estimates and Trends - The current consensus EPS estimate for the upcoming quarter is $0.42 on revenues of $1.19 billion, and for the current fiscal year, it is $1.76 on revenues of $4.82 billion [3] - The estimate revisions trend for Rithm is currently mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [2] Group 3: Industry Context - Rithm belongs to the Zacks Financial - Miscellaneous Services industry, which is currently in the bottom 40% of over 250 Zacks industries, suggesting potential challenges in outperforming the market [4] - The performance of Rithm's stock may be influenced by the overall outlook of the industry, as research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [4] Group 4: Competitor Insights - HIVE Digital Technologies, another company in the same industry, is expected to report a quarterly loss of $0.08 per share, reflecting a year-over-year change of +55.6%, with revenues projected at $31.85 million, up 35.1% from the previous year [5][6]