Investment Thesis
Rocket Companies faces catastrophic cyclical headwinds with 98% revenue collapse in the mortgage banking sector, while interest coverage has deteriorated to a dangerously tight 1.1x, leaving minimal debt service cushion. Reported profitability metrics are unrealistically high relative to actual shareholder returns (ROE 1.3%, ROA 0.5%), indicating either severe data quality issues or substantial one-time items masking underlying operational distress.
Strengths
- Positive operating cash flow of $1.9B provides near-term liquidity support
- Debt-to-equity ratio of 0.45x remains within reasonable leverage parameters
- Strong balance sheet with $23.2B stockholders equity provides solvency buffer
Risks
- Revenue collapsed 98% YoY, indicating severe industry cyclical downturn with no evidence of stabilization
- Interest coverage ratio of 1.1x is critically low with virtually no margin for error on debt service obligations
- Disconnect between reported 58.6% net margin and 1.3% ROE suggests earnings quality concerns or unsustainable accounting items masking operational deterioration
Key Metrics to Watch
- Mortgage origination volume and market share trends
- Interest coverage ratio trajectory and cash flow adequacy for debt service
- Operating cash flow sustainability and whether it can support dividend/shareholder distributions
Financial Metrics
Revenue
507.0M
Net Income
297.0M
EPS (Diluted)
$0.10
Free Cash Flow
1.8B
Total Assets
59.4B
Cash
2.7B
Profitability Ratios
Gross Margin
456.2%
Operating Margin
78.9%
Net Margin
58.6%
ROE
1.3%
ROA
0.5%
FCF Margin
357.8%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.45x
Debt/Assets
60.9%
Interest Coverage
1.15x
Long-term Debt
10.4B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-13T07:28:38.808063 |
Data as of: 2026-03-31 |
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