Rocket Companies, Inc. (NYSE:RKT) closed at $10.83 on October 13. The stock has fallen roughly 30% over the last six months, compared to a 21.5% return for the Insider Monkey Billionaire Index and 14.0% for the State Street SPDR S&P 500 ETF Trust.
Rocket Companies calls itself a fintech firm with mortgage, real estate, and personal finance arms. It owns Redfin, Rocket Money and Rocket Loans. Since the June quarter, it has reported a single segment called Mortgage. That one covers lending and servicing alongside title, closing, and appraisal. The rest is grouped under All Other and brings in roughly a fifth of revenue.
Two of those jobs decide the result. Rocket lends people the money to buy a house, then collects the monthly payment for as long as that loan lasts. The first pays a fee once and the second pays a little every month for years. A year ago, the company bought Mr. Cooper for $14.2 billion and became the biggest in the country at both. Rocket now collects the payments of close to 10 million homeowners. The revenue arrived. The profit has not.
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The Payments Keep Arriving When the Lending Stops:
Revenue grew 91.9% in the most recent quarter. That is what buying the largest mortgage servicer in the country looks like on an income statement. Most of it came from the acquisition rather than from writing new loans.
The appeal of servicing is that it is largely indifferent to the mortgage rate. A homeowner with a loan keeps paying it whether borrowing is cheap or expensive. Rocket takes a slice of every one of those payments.
Lending behaves the opposite way. Fewer people borrow when money costs more, so fee income dries up in exactly the market we have now. Owning both halves is the hedge, and more billionaires hold this stock than any other name in our 10 Best Mortgage Finance Stocks To Buy According to Billionaires. To see the other nine, click HERE.
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The Returns Have Not Followed the Revenue:
Return on equity is 3.03%. For a business that just doubled in size, that is a thin result. It is a reminder that scale and profitability are not the same thing.
Part of the explanation is the deal itself. Rocket paid for Mr. Cooper in shares rather than cash, so the equity base grew at the same moment the revenue did. Profit now has to catch up to a much bigger starting point.
The rest is accounting. Buying two companies left Rocket writing off the value of what it bought, and it names the acquisitions as the reason that charge rose sharply. The cost is real on paper without any cash leaving the business.
Investors have not waited for it to work through. The shares have lost a large part of their value over the past year, which suggests they are not treating this deal as finished business.
What the Market Is Paying For:
The stock changes hands at 55.23 times what it earned over the past year and 15.58 times what analysts expect it to earn next year. That gap is most of the argument. The market is not pricing the present. It is pricing a recovery that has not happened yet.
Price-to-book sits at 1.46, so you pay a premium to the accounting value of the assets. That is arguable for a servicing franchise this large, because the fees it collects run for years after the loan is written. It is much harder to defend if the earnings rebound slips.
Conclusion:
Rocket bought scale, and it got scale. The servicing book is real, and it pays through a weak lending market, which is much of the point of owning it. What has not arrived is a decent return on the money shareholders have tied up. The multiple on next year’s earnings assumes that return is close. The thing to watch is whether profit starts growing faster than the share count, because that is the test this deal still has to pass.
Market Sentiment:
Rocket Companies, Inc. was held by 99 hedge funds with a combined stake value of about $2.92 billion at the end of Q2 2026 in the Insider Monkey database. This is down from 112 hedge fund holders with a cumulative investment value of around $3.26 billion in the previous quarter.
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This article is originally published at Insider Monkey.
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