Mar 1, 2021
general Analysis
[4 min Read]
Summary
Rocket Companies (RKT) is a fintech company that operates several brands including the flagship Rocket Mortgage. I think RKT presents an opportunity to buy serious value at a cheap price, because the market has not priced in the underlying fact that RKT is a tech company akin to Square, Paypal, etc.
RKT has disrupted the lending industry and has embraced a fully digital ecosystem, which will continue to drive customer acquisition and retention in the future
RKT spends considerable money and resources on UX/UI development, client experience, and marketing. This will also help drive their continued expansion into the lending market.
RKTs balance sheet, income, and liabilities support a stock price several times higher than the current price.
Price Target
Comparable on P/E ratio
Assume RKT is worth 15x earnings, and that it hits the estimate of $3.85 eps. That would put its fair value right now at $57.75 per share.
Management
The RKT team is not the new kids on the block, they have decades of industry experience. Also, I value leaders that make people feel valued. And on that note, under CEO Jay Farner Quicken Loans has been in the top 30 of Fortune's “100 Best Companies to Work For” list for 17 consecutive years.
Financials Summary
When it comes to the numbers, RKT is killing it. I don't want to just spout a bunch of numbers that anyone can easily go look up so here's a couple that stood out to me from the Q3 earnings announcement and related data:
Product Channel Growth
Options Chain
Calls for March 5, 2021 as of February 26, 2021 (note: these prices will likely be differnt when viewed in real time)
https://finance.yahoo.com/quote/RKT/options/
Contract Name |
Strike |
Last Price |
Volume |
Open Interest |
Implied Volatility |
RKT210305C00020000 |
$ 20.00 |
$ 2.01 |
2,260 |
2,238 |
0.00% |
RKT210305C00020500 |
$ 20.50 |
$ 1.62 |
1,332 |
2,291 |
0.00% |
RKT210305C00021000 |
$ 21.00 |
$ 1.44 |
2,971 |
2,918 |
0.00% |
RKT210305C00021500 |
$ 21.50 |
$ 1.04 |
2,013 |
1,431 |
0.00% |
RKT210305C00022000 |
$ 22.00 |
$ 0.85 |
10,224 |
5,330 |
3.13% |
RKT210305C00022500 |
$ 22.50 |
$ 0.73 |
8,495 |
3,009 |
6.25% |
RKT210305C00023000 |
$ 23.00 |
$ 0.64 |
11,797 |
6,783 |
12.50% |
RKT210305C00023500 |
$ 23.50 |
$ 0.57 |
4,102 |
1,274 |
12.50% |
RKT210305C00024000 |
$ 24.00 |
$ 0.49 |
5,533 |
3,698 |
25.00% |
RKT210305C00024500 |
$ 24.50 |
$ 0.46 |
1,141 |
828 |
25.00% |
RKT210305C00025000 |
$ 25.00 |
$ 0.40 |
14,286 |
7,852 |
25.00% |
RKT210305C00026000 |
$ 26.00 |
$ 0.32 |
3,605 |
2,100 |
50.00% |
RKT210305C00026500 |
$ 26.50 |
$ 0.28 |
497 |
567 |
50.00% |
RKT210305C00027000 |
$ 27.00 |
$ 0.26 |
2,048 |
1,150 |
50.00% |
RKT210305C00027500 |
$ 27.50 |
$ 0.23 |
265 |
250 |
50.00% |
RKT210305C00028000 |
$ 28.00 |
$ 0.21 |
607 |
949 |
50.00% |
RKT210305C00028500 |
$ 28.50 |
$ 0.19 |
391 |
365 |
50.00% |
RKT210305C00029000 |
$ 29.00 |
$ 0.16 |
162 |
198 |
50.00% |
RKT210305C00030000 |
$ 30.00 |
$ 0.15 |
2,768 |
1,958 |
50.00% |