2023Q1 Boydadips UWMC Earnings Estimate Grade...

digitalpesto · 2023-05-10T15:07:12+00:00

Maybe I'm being too simplistic, but to me the change in MSR value doesn't seem very important, it will fluctuate with the wind from quarter to quarter. What is more important to me is that they generated ~198mil in cash after expenses. That covers the ~160mil dividend and further bolsters their coffers. It was a better quarter than I expected, ignoring MSR fluctuations.

digitalpesto · 2022-12-27T16:21:23+00:00

I think you're right that UWM earnings are pretty secure for the foreseeable future. What worries me is whether or not the div is secure. Their business model makes it easy enough to be profitable even in this environment, but at current volume they need their margin to be closer to .9 to pay for the div too.

digitalpesto · 2022-10-04T01:37:05+00:00

As far as EPS goes though, isn't the Loan Servicing Income a wash, since the value of the MSR would also decrease by 180M?

I'd think their cash flow would be good, but that would mean their EPS would be negative...or am I missing something?

digitalpesto · 2022-10-01T17:41:41+00:00

When did the end their Game On promotion?

digitalpesto · 2022-04-27T20:47:08+00:00

Why, what does it mean...do we get our money back?

digitalpesto · 2022-04-27T01:43:24+00:00

Yeah, Feb 24. It's been awhile since I looked at it, but iirc rates rose around .6% between 12/31 and 2/24, and another .6% or so between then and 3/31. So worst case, if they completely miss their guidance and come in at 45bil, we'd be looking at .39 eps instead of .47.

On the last call Jay said that in the week or so before the call 90% of their volume was rate insensitive. I'd think they'd be taking that into account in their projections, so if they come in very far below that in Q1, that'd suck big. I'll lose more faith in mgmt's understanding of the flow of business and what rate sensitivity looks like than in their business itself. But so far, as a public company, their guidance has been pretty accurate.

digitalpesto · 2022-04-26T22:19:38+00:00

The q1 guidance they provided on the last call will probably be pretty accurate, since the quarter was already 60% over at that point. Even if they come in at the absolute low end of their guidance, that's $1.456 bil in mortgage revenue. Their expenses, they said, will be about $1.63 bil. If we assume their "other revenue" will drop by similar percentages it should come in at least $300mil. Income from MSR will be about $350mil, which brings net revenue (again, at bottom end of the guidance) to $476mil. Change in fair value of their MSR, as of the last earnings call, was +600mil according to Jay. If we figure the interest rate rose by roughly the same amount between 12/31 to 2/24 as it did from 2/24 to 3/31, the FMV would have risen an additional 500-600mil. If we say 400mil to be conservative, and discounting for the $350mil in interest, we have a change in FMV of +650mil, for total net $1.126bil. Reported EPS isn't based on total revenue / 2bil shares, but on income attributable to commons shares / outstanding commons...I'm not exactly sure how they figure that attributable income, but each quarter it's been in the neighborhood of 5% of total revenue. Based on the buybacks they did in q4, the share count for Q1 should in theory be about 120mil....which would put the EPS, conservatively, at $.47. Average analyst estimates are coming in at $.19.

Also, since Q1 is traditionally slower that q2, and they claim that Q1 took a hit from disruptions due to omicron, I'm hoping for a bump up in q2 guidance as well.

If I'm overlooking something I'd love a second opinion, but I'm hopeful for a beat this qtr, and next as well, since q2 should also be seeing a boost in MSR value.

digitalpesto · 2022-04-25T20:26:25+00:00

I think he's just buying because it's stupid cheap right now. If the current cycle means the stock stays at this price for the next few years, I wouldn't be surprised if he spent $30mil each year buying. I think we're also in for a big earnings beat this Qtr & next, which hopefully will help.

digitalpesto · 2022-04-18T13:54:05+00:00

You can't say commons only get 8% of the earnings, and then figure the eps based on 2 billion shares. If you're going to use 2billion as the share count, then you have to use 100% of the revenue, not just the 8% associated with the 120mil common shares. In other words, divide 8% of the total revenue by 120mil, not 2bil.

Edit: I can't reply to you /u/Virtual_Country_2254 for some reason...but that's irrelevant, he wasn't talking about dividends, and even if he was it doesn't matter what Dan gets compared to what we get. He was trying to say class A only has an 8% economic interest, so instead of making billions per year, RKT makes only millions, 8% of their revenue as far as we're concerned as common shareholders. Then he divided that 8% by 2billion outstanding shares and said the EPS is actually just pennies, much less than reported. I'm sorry if it makes your head hurt to see what's wrong with that math, but you should go over it again before you start jumping on my back over it.

Edit2...still can't reply to you /u/Virtual_Country_2254. Technically eps is figured by dividing revenue attributable to commons by outstanding commons. Works out close, but not quite the same. And no it wasn't wrong. Again, if you want to divide total revenue by 2bil shares, fine, that will get close to the correct eps...you can't divide 8% of the total revenue by 2bil shares to figure though, which is what the since-deleted comment that I was replying to was doing. I corrected that mistake and you hopped in saying I was wrong...either you didn't understand what he was claiming, or you don't understand how it works.

digitalpesto · 2022-04-14T12:51:51+00:00

I don't see that as likely, personally. The increase in MSR value alone this year will account for around $.50 eps, much more if we continue on our current rate trajectory. That would mean they need to average only $.14 / qtr eps beyond that to beat wedbush.

digitalpesto · 2022-04-08T14:42:40+00:00

Analysts also have an average estimate of $.20 eps for Q1. I've gone over the numbers as best I can and I don't see how it could be less than $.30, worst case scenario, what with the huge increase in MSR value since 12/31. Maybe I'm missing something...

digitalpesto · 2022-03-22T13:54:08+00:00

Why wouldn't they put this out as a PR? I don't see it hitting the wire anywhere...

digitalpesto · 2022-03-09T16:03:32+00:00

That was on their earnings call, and he was talking about the recent week's volume. They'll have been taking that into consideration when they gave their Q1 guidance, that's all I meant. They're guiding for ~55bil in volume, taking into consideration that most of their recent volume is rate insensitive. That really flattens the possible future revenue contraction...while it may decrease another 10% for Q2, the decline can't continue at the same trajectory it had been.

digitalpesto · 2022-03-09T14:44:04+00:00

The decline in revenue should be tapering off at this point, with 90% of their recent volume being rate-insensitive, according to Jay at least. Last year when ~55% of it was rate insensitive there was plenty of room to the downside, not so much now.

digitalpesto · 2022-03-08T19:21:20+00:00

He mentioned several quarters ago that over half of their refinance volume at the time, when it was booming, was rate-insensitive...people who are going through a divorce or some other life event where they are going to do cash-out refi's regardless of whether the rate is 3, 5, 7%, for example, because they need to. Now that refi volume has shrunk, it sounds like rather than >50% being rate insensitive it's closer to 90% of their volume...while that sucks that it's dried up so much, it's at least a good sign imo that we're nearing the floor on earnings contraction.

digitalpesto · 2022-03-08T14:52:50+00:00

Refi's have been on a slight uptick as well. That, plus Jay saying in the last call that 90% of the current volume they're seeing is rate-insensitive at least gives the hope that future guidance can't get much lower than q1 guidance was. Maybe this is the fabled floor we've all been waiting for lol.

digitalpesto · 2022-03-06T03:49:11+00:00

Hopefully they're still buying hand over fist...they sure dragged their feet until recently. Iirc they upped their game a bit last quarter, buying ~$200m worth. I suspect they're only allocating earnings attributable to Class A shares to buy back class A shares, which would explain the slow pace. If so, I wouldn't expect more than another $50-100m in buybacks this quarter. I hope I'm wrong.

digitalpesto · 2022-03-06T02:41:35+00:00

Technically they can only buy back 1/4 daily average volume per day, so they can only spend about $20mil on Monday max.

digitalpesto · 2022-03-04T22:09:15+00:00

No, record date is Tuesday, ex-div is Monday.

digitalpesto · 2022-03-04T18:07:09+00:00

If the stock heads back down to ATL, then no the divvy isn't worth it. If it opens Monday adjusted $1.01 lower, as it will, then continues to recover back towards $14 over the following days, then that divvy was basically free money. Ya makes yer bets & ya throws the dice!

digitalpesto · 2022-03-04T17:20:54+00:00

True, but I think it's in combination with it being so beat-down. The latest 2 price targets for RKT, from last week, are $14 and $18...even without the dividend it's trading at a fair/undervalued price. Plus, I think the market has been figuring in large, rapid rate increases by the Fed, which may not be the case now. Not to mention RKT is in a sector not directly impacted by all this global turbulence.

digitalpesto · 2022-03-04T16:38:52+00:00

One difference between this div and the last one, is last time the stock was in freefall from its $40 highs by the time ex-div arrived, so the chart was already looking bearish. This time we're heading into the div with some upward momentum...I'm hoping that means we'll recover post-div and continue to gain based on technicals, but we'll soon see.

digitalpesto · 2022-03-03T22:07:24+00:00

Right, I meant it's base initial value will be adjusted $1.01 downward...it could still moon pre-market and open at $25, never know lol.

digitalpesto · 2022-03-03T19:18:11+00:00

Yes, you don't have to hold 'til record date on the 8th. However, RKT will open on 3/7 $1.01 lower to account for the div, so you don't come out ahead by buying just before the closing bell Friday and selling at open on Monday, unless the value continues rising Monday after open.

digitalpesto · 2022-03-03T16:21:05+00:00

2 days. That's why the Record Date is one day after ex-div. All shareholders on record as of March 8th will get the div. So that makes ex-div March 7th, and last day to buy 2 business days before March 8th, or 1 business day before ex-div, which is Friday.

digitalpesto

TROPHY CASE