Rocket Companies, Inc. (RKT): A Bull Case Theory

We came across a bullish thesis on Rocket Companies, Inc. on ValueInvestorsClub.com by Zipper. In this article, we will summarize the bulls’ thesis on RKT. Rocket Companies, Inc.’s share was trading at $14.22 as of June 27^th. RKT’s trailing and forward P/E ratios were 711.00 and 55.25, respectively, according to Yahoo Finance.

Rocket Companies (RKT), the largest direct-to-consumer mortgage originator in the U.S., stands poised to benefit from multiple cyclical and structural tailwinds. Refinance originations, RKT’s stronghold, are currently at trough levels, but with ~20% of U.S. mortgages bearing rates over 6%, the potential for a sharp rebound is high as interest rates decline. This positions RKT as a countercyclical opportunity in a slowing economy.

The acquisition of Mr. Cooper’s (COOP) servicing portfolio, expected to close in Q4 2025, provides RKT with a sizable base of refinance-ready borrowers, leveraging its industry-leading recapture rate. Management’s conservative synergy guidance of 3.5% of pro forma net income could prove understated, with potential upside to 12% amid current rates.

Coupled with the acquisition of Redfin (RDFN), which enhances RKT’s ability to penetrate the less cyclical home purchase market via control of a leading listing platform, RKT’s business becomes more diversified and less rate-sensitive. Pro forma, revenue will be split across originations (44%), servicing (28%), and personal finance, title, and other sources (28%), creating a more stable, higher multiple business. The combined deals also boost public float from ~7% to ~50%, paving the way for index inclusion and broader investor interest.

Valuation reflects asymmetric upside: downside sits at ~$8.30/share (2x tangible book), while upside could reach $21.64/share with full synergy realization, and base case sits at $18/share by YE 2025. Risks include prolonged high rates and integration hurdles, but near-term catalysts—deal closings, synergy realization, and float expansion—offer a compelling investment case with substantial upside.

Previously, we covered a bullish thesis on Rocket Companies, Inc. by Unemployed Value Degen in December 2024, which highlighted the company’s potential to benefit from a home equity loan boom and its resilient servicing income. The company’s stock price has appreciated by approximately 0.3% since our coverage. The thesis still stands. Zipper shares an identical thesis but emphasizes M&A-driven diversification and synergy realization.

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Disclosure: None. This article was originally published at Insider Monkey.