When deciding whether to buy, sell, or hold a stock, investors often rely on analyst recommendations. Media reports about rating changes by these brokerage-firm-employed (or sell-side) analysts often influence a stock's price, but are they really important?Let's take a look at what these Wall Street heavyweights have to say about Rithm (RITM) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.Rithm currently has an average brokerage recommendation (ABR) of 1 ...

Rithm Capital Corp. (RITM) reached a milestone by issuing an $878-million mortgage servicing rights (MSR)-backed securitized note, marking the largest MSR-backed debt issuance in history. This is only the second-ever non-recourse MSR securitization, meaning the debt is backed solely by MSR assets rather than Rithm’s broader financials. The three-year fixed financing provides stability, ensuring predictable cash flow over the lifespan of the assets.This transaction follows Rithm’s first non-recourse MSR secu ...

In the latest trading session, Rithm (RITM) closed at $11.82, marking a +0.94% move from the previous day. This move lagged the S&P 500's daily gain of 1.08%. At the same time, the Dow added 0.92%, and the tech-heavy Nasdaq gained 1.41%.Prior to today's trading, shares of the real estate investment trust had lost 2.25% over the past month. This has was narrower than the Finance sector's loss of 4.3% and the S&P 500's loss of 8.26% in that time.The upcoming earnings release of Rithm will be of great interest ...

Core Insights - The article focuses on analyzing Rithm Capital's (NYSE:RITM) recent performance and comparing it with 17 mortgage real estate investment trust (mREIT) peers, highlighting key metrics such as investment composition, leverage, hedging coverage ratio, and economic returns [1][2][3] Investment Composition and Performance - As of 12/31/2024, RITM's investment portfolio consisted of 18% fixed-rate agency MBS, 0% variable-rate agency MBS, 37% mortgage servicing rights (MSR), and 45% non-agency MBS and other mortgage-related investments [17][18] - RITM's book value (BV) per share increased from $12.31 at the end of Q3 2024 to $12.56 at the end of Q4 2024, reflecting a quarterly increase of 2.03% [20] - The economic return for RITM in Q4 2024 was 4.06%, driven by rising mortgage interest rates and U.S. Treasury yields [20][21] Leverage and Hedging - RITM's on-balance sheet leverage ratio was 2.7x, while the at-risk leverage ratio was 0.9x as of 12/31/2024, indicating a slight increase in on-balance sheet leverage and a slight decrease in at-risk leverage compared to the previous quarter [18][19] - The hedging coverage ratio for RITM was geared towards lower mortgage interest rates, which helped mitigate BV volatility during periods of declining rates [46] Comparative Analysis with Peers - RITM's trailing 24-month economic return of 21.33% was significantly higher than the average returns of its mREIT peers, indicating strong performance relative to the sector [44] - RITM's current stock price of $11.65 per share represented a 6.80% discount to the estimated current BV of $12.50, suggesting that RITM is appropriately valued compared to its peers [41][47] Diversification and Future Outlook - RITM has diversified its investment portfolio through acquisitions, including Sculptor Capital Management and Specialized Loan Servicing, which are expected to drive future growth and returns [29][50] - The company's focus on MSR and related assets positions it well to benefit from rising interest rates, as these assets typically gain value in such environments [25][37]

Company Performance - Rithm (RITM) closed at $11.82, reflecting a +1.81% increase compared to the previous day, outperforming the S&P 500's gain of 1.12% [1] - Over the past month, RITM shares appreciated by 1.31%, while the Finance sector declined by 1.89% and the S&P 500 fell by 4.13% [1] Upcoming Earnings - Rithm is expected to report an EPS of $0.47, which represents a 2.08% decrease from the same quarter last year [2] - The consensus estimate for revenue is $1.19 billion, indicating a 7.35% decline compared to the same quarter last year [2] Full-Year Estimates - The Zacks Consensus Estimates for Rithm's full-year earnings are $1.94 per share and revenue of $4.89 billion, reflecting year-over-year changes of -7.62% and -6.53% respectively [3] - Recent analyst estimate revisions suggest a positive outlook for the company's business [3] Valuation Metrics - Rithm has a Forward P/E ratio of 5.98, which is lower than the industry average of 9.36, indicating that Rithm is trading at a discount [6] - The Financial - Miscellaneous Services industry, to which Rithm belongs, has a Zacks Industry Rank of 35, placing it in the top 14% of over 250 industries [6] Zacks Rank System - Rithm currently holds a Zacks Rank of 2 (Buy), with the Zacks Consensus EPS estimate increasing by 0.91% over the last 30 days [5] - The Zacks Rank system has a strong track record, with 1 stocks delivering an average annual return of +25% since 1988 [5]

Core Viewpoint - Rithm Capital (NYSE: RITM) reported better-than-expected fourth quarter earnings driven by strong performance in servicing and asset management businesses [1] Group 1: Financial Performance - The company continued to support its generous dividend with distributable earnings in the fourth quarter [1] - The mortgage REIT sector is highlighted as a key area of focus for Rithm Capital [1]

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Core Insights - Rithm Capital Corp. (NYSE: RITM) is experiencing acquisition-driven earnings growth and has a high margin of safety regarding its dividend [1] Company Analysis - The company is positioned as a mortgage real estate investment trust, focusing on growth through acquisitions [1] - There is a strong emphasis on innovation and disruption within the financial sector, indicating a proactive approach to investment opportunities [1] Investment Opportunities - The analysis highlights the potential for growth buyouts and value stocks, suggesting a favorable environment for investors looking for high-tech and early growth companies [1]

Acquisition and Mergers - Rithm Capital completed the acquisition of Computershare Mortgage Services for approximately $731.0 million, including $56.0 billion in unpaid principal balance of MSRs and $98.0 billion of third-party servicing UPB[30]. - The "higher for longer" interest rate environment is expected to lead to increased bank merger and acquisition activity, creating further investment opportunities for Rithm Capital[51]. - The company is exploring various opportunities for acquisitions and dispositions of assets, including equity or debt offerings[62]. Market Trends and Forecasts - The Mortgage Bankers Association estimated total U.S. origination volume for 2024 at $1.8 trillion, a 22% increase from $1.5 trillion in 2023, with 28% of activity related to refinance volume[37]. - The Mortgage Bankers Association forecasts a 15% increase in total mortgage origination volume to $2.1 trillion in 2025, with an 8% increase in purchase volume and a 34% increase in refinance volume[37]. - The current market dynamics show increasing home prices, strong credit quality of loans, and rising yields, enhancing the mortgage market's appeal to investors[56]. - The overall financial position of consumers remains strong, despite a rise in delinquencies among recent loan originations[59]. - The affordability challenges posed by higher mortgage rates have reduced home sales, impacting contributions to prepayment speeds from housing turnover[54]. - The demand for Single-Family Rental (SFR) properties is expected to continue due to a long-term shortage of affordable housing in the U.S.[58]. Company Performance and Financials - Sculptor, a subsidiary of Rithm Capital, managed approximately $34.0 billion in assets under management as of December 31, 2024[46]. - Rithm Capital's total assets as of December 31, 2024, amounted to $46.05 billion, an increase from $24.04 billion in 2023[64]. - The company's investments in residential mortgage loans reached $24.11 billion in 2024, up from $19.01 billion in 2023, reflecting a growth of approximately 27.5%[64]. - Rithm Capital's debt increased to $28.28 billion in 2024, compared to $23.64 billion in 2023, representing a rise of about 19.7%[64]. - The portfolio as of December 31, 2024, includes total assets of $46,048,957 thousand, with investments amounting to $28,665,853 thousand[64]. - As of December 31, 2024, total liabilities stand at $38,162,647 thousand, with debt comprising $28,284,762 thousand[64]. Servicing and Income - Servicing income is influenced by the size of the servicing portfolio, delinquency rates, and cost to service per loan[39]. - The "higher for longer" rate environment continues to benefit MSR investors by generating substantial float income and stable cash flows from the large MSR portfolio[55]. - The company reported that 88.9% of the underlying unpaid principal balance (UPB) of mortgages related to owned MSRs is serviced by Newrez[71]. - Revenues are primarily derived from rents collected from tenants for SFR properties, influenced by macroeconomic factors and local market conditions[86]. Investment Strategy and Portfolio - Rithm Capital's investment landscape includes a diverse range of products, such as residential mortgage loans and Non-Agency RMBS, aimed at attractive risk-adjusted yields[49]. - The investment portfolio consists mainly of residential mortgage loans, SFR properties, consumer loans, Non-Agency RMBS, Excess MSRs, and servicer advance investments[79]. - The company expects to continue financing government-backed securities acquisitions with repurchase agreement financing, which typically bears interest rates over SOFR[76]. - The company has financed investments in consumer loans with securitized non-recourse long-term notes, with stated maturity dates of May 2036 and June 2028 for different loan types[89]. - The company retains risk retention bonds from its Non-Agency RMBS portfolio, which are not consolidated under Dodd-Frank regulations[90]. Operational and Regulatory Compliance - The company is subject to extensive regulation by various federal, state, and local authorities, impacting operational compliance[122]. - Rithm Capital aims to maintain compliance with the 40% test under Section 3(a)(1)(C) of the 1940 Act, ensuring that less than 40% of the value of adjusted total assets consists of "investment securities"[133]. - Rithm Capital's subsidiaries that qualify for exclusion from the definition of an investment company must ensure that at least 55% of their assets comprise qualifying real estate assets[135]. - The company regularly monitors its portfolio to maintain compliance with the 1940 Act exclusions, which may limit investment opportunities[139]. Human Capital and Corporate Governance - Rithm Capital emphasizes a diverse and inclusive workplace, with tailored onboarding and training plans for new employees[147]. - The company provides a competitive compensation and benefits package, including medical, dental, and vision coverage, to attract and retain talent[154]. - Rithm Capital's corporate governance includes a board of directors with a majority of independent members, ensuring ethical business conduct[157]. - Rithm Capital's human capital team focuses on recruitment and development, prioritizing candidates with substantial experience and industry relationships[146]. Technology and Innovation - The company has introduced an AI initiative, Rezi AI, aimed at improving efficiencies in servicing call centers, with a multi-year roadmap for broader applications[67].

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