Rocket Companies: Priced For Perfection

Romil Patel1.07K FollowersFollow5ShareSavePlay(14min)CommentsSummaryMortgage origination and brokerage volumes remain structurally constrained, with refinancing largely shut and existing home sales still well below prior-cycle levels.Fed Rate cuts don't help, as it's likely the 10 year rises as overnight rates are cut.Redfin would need to double revenue to approach EBIT profitability, despite never earning positive EBIT even at its 2021 peak.Even in a 100% revenue increase for both the Rocket Mortgage and Redfin businesses, EV/EBIT would be around 16x, making RKT priced to perfection. Mario Tama/Getty Images News Rocket Companies (RKT) recently completed its merger with Mr. Cooper in October and earlier in July completed its acquisition of Redfin. There's both potential upside due to the synergies of the combined models, but also theThis article was written byRomil Patel1.07K FollowersFollowI focus on thematic investing, crisis investing, systematic options trading through both premium selling and long-vol positions, and discretionary global macro. I have experience with private M&A along with many years of publicly-traded equities and equity-based derivatives trading experience.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Short position through short-selling of the stock, or purchase of put options or similar derivatives in RKT over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.