M&A Watch: Buy the Surge in Rocket Companies (RKT) Stock?

Core Viewpoint - Rocket Companies (RKT) stock has surged over +35% in 2025, driven by plans to acquire Redfin (RDFN) and Mr. Cooper Group (COOP), creating a comprehensive homeownership experience [1][4][5] Group 1: Acquisitions - Rocket Companies plans to acquire Redfin in an all-stock transaction valued at $1.75 billion, with Redfin's stock priced at $12.50 per share [4] - The acquisition of Mr. Cooper Group, valued at $9.4 billion with a stock price of $143 per share, will expand Rocket Companies' customer base and enhance its mortgage services [5] - The merger will result in a combined mortgage portfolio exceeding $2 trillion, serving nearly 10 million customers [6] Group 2: Financial Outlook - Total sales for Rocket Companies are projected to increase by 13% in fiscal 2025 and by another 21% in FY26, reaching $7.11 billion [7] - The acquisitions are expected to contribute over $3 billion in annual revenue [7] - Annual earnings are anticipated to double to $0.46 per share in 2025, compared to $0.23 in 2024, with FY26 EPS projected to rise by 69% to $0.78 [7][8] Group 3: Balance Sheet - Rocket Companies holds $1.28 billion in cash and equivalents, with total assets of $24.51 billion, significantly exceeding total liabilities of $15.46 billion, which includes $10.84 billion in long-term debt [9] Group 4: Market Sentiment - The potential for further rate cuts has increased optimism for mortgage service providers, with Rocket Companies being a market bellwether amid broader market declines [2] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential long-term value creation through the acquisitions, although better buying opportunities may arise after the recent rally [10]