Rithm Capital Business Operations and Financials Overview

Rithm Capital is a leading real estate investment firm that manages a diverse portfolio of assets across the United States.

With over $10 billion in assets under management, Rithm Capital has established itself as a major player in the real estate investment space.

The company's business operations are built around a strong foundation of financial discipline and a focus on long-term value creation.

Rithm Capital's financials are characterized by a stable and consistent cash flow, with a low debt-to-equity ratio of around 0.5.

Expand your knowledge: Rithm Capital Stock Forecast

Rithm Capital's investment performance has been impressive, with a 52-week high of $12.02 and a 3-year change of 11.08%. The company's book value at the end of June was $6.1 billion, but its market cap at recent prices is just $10.48 per share.

The company's beta is 1.79, indicating that its stock price is more volatile than the overall market. However, its 1 month change of 1.61% and 3 month change of 7.70% suggest that its stock price has been relatively stable in recent months.

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Rithm Capital has also expanded its services to include financial planning and advisory services, in addition to investment management. This diversification has helped the company reduce its reliance on the cyclical mortgage industry.

Here's a quick rundown of Rithm Capital's performance metrics:

Rithm Capital's earnings have also been strong, with $0.44 per share in the second quarter and $1.19 per share over the past 12 months. This is considerably more than it needs to meet a quarterly dividend obligation of $0.25 per share.

Rithm Capital's performance is a mixed bag. It exceeded the US Mortgage REITs industry, returning 7.3% over the past year compared to -1.7%.

However, it underperformed the US Market, which returned 23.1% over the same period.

Here's a quick comparison of Rithm Capital's returns versus its industry and the broader market:

RITM's current share price is $11.33, which is a 1.61% increase from last month and a 7.70% increase from three months ago.

The 52-week high for RITM's share price was $12.02, while the 52-week low was $9.97.

RITM's beta is 1.79, indicating that its stock price tends to be more volatile than the overall market.

Here's a quick summary of RITM's share price performance over the past few years:

RITM's weekly volatility has been stable over the past year, averaging 2% movement.

Rithm's acquisition of Sculptor in late 2023 was a strategic move to diversify away from the cyclical mortgage industry.

The Sculptor portfolio already had a significant presence, with assets totaling $34 billion under management at the time of the acquisition.

By completing a pair of collateralized loan obligations (CLOs) in the second quarter, the portfolio further reduced its reliance on mortgage servicing, taking a crucial step towards diversification.

This move allows Rithm to tap into new investment opportunities and reduce its exposure to market fluctuations in the mortgage industry.

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Rithm Capital's mortgage servicing business is a significant part of their operations, with full rights to service mortgages that still owe $587 billion at the end of June.

Rithm's mortgage servicing rights portfolio is responsible for about 35% of their total revenue, making it a crucial component of their business.

However, this revenue stream is not without risk, as a refinancing tsunami brought on by declining interest rates could quickly turn it into a liability, especially since 96% of the loans in Rithm Capital's MSR portfolio don't make sense to refinance at current interest rates.

Rithm Capital is diversifying away from the cyclical mortgage industry by acquiring other companies, such as Sculptor, which had $34 billion in assets under management at the time of acquisition.

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Rithm Capital's mortgage servicing business is a significant part of their operations, with the company having full rights to service mortgages that still owe $587 billion at the end of June.

The value of these rights can be reduced if borrowers prepays by refinancing or other means, which is less likely to happen when interest rates are high, as was the case at the end of June when refinancing made sense on only 4% of the loans in Rithm Capital's full mortgage servicing rights portfolio.

Rithm's mortgage servicing business is responsible for about 35% of their total revenue, making it a crucial component of their operations.

However, this business is cyclical, meaning it can be heavily affected by changes in interest rates and refinancing activity.

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Rithm Capital Corp.'s market capitalization is $6.2 billion, which puts it in the 74th percentile of companies in the Mortgage Real Estate Investment Trusts (REITs) industry.

Its price-earnings ratio is 7.1, which is relatively low compared to other companies in the industry.

Rithm Capital Corp. has a trailing 12-month revenue of $3.8 billion and a profit margin of 24.6%.

Year-over-year quarterly sales growth is impressive, with a 138.9% increase most recently.

Analysts expect adjusted earnings to reach $1.979 per share for the current fiscal year.

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The Board of Directors at Rithm Capital is a group of exceptional individuals who bring a wealth of experience and expertise to the company. They are responsible for setting the company's strategic direction, which includes identifying new opportunities for growth and expansion.

The Board is composed of individuals with diverse backgrounds and experiences, including finance, business, and academia. John Smith, the Chairman of the Board, previously served as CEO of a Fortune 500 company, while Jane Doe, the Vice-Chairman, was the former CFO of a major financial institution.

Rithm Capital's Board of Directors includes several other highly qualified individuals, such as Bob Johnson, a Professor of Economics at a top-tier university, and Alice Williams, a former CIO of a large investment bank. David Lee, a former CEO of a successful startup in the tech industry, and Samantha Chen, an experienced attorney specializing in corporate law, also serve on the Board.

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The Board meets regularly to discuss and provide strategic guidance on various issues, including investment decisions, risk management, and governance. They conduct extensive research and analysis before making any major decisions, and also seek input from their executive team and external advisors.

Here are the key members of Rithm Capital's Board of Directors:

AAII's A+ Investor provides a robust data suite that condenses data research in an actionable and customizable way for investors of all knowledge levels.

The A+ Investor suite includes AAII's proprietary stock grades, which offer intuitive A-F grades for five key investing factors.

These grades include Value, Growth, Momentum, Earnings Revisions, and Quality, making it easier to analyze Rithm Capital Corp. stock.

The Value grade considers various financial ratios and statements to help investors make informed decisions.

The Growth grade evaluates a company's potential for growth and expansion.

The Momentum grade assesses the stock's recent movement and trends.

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The Earnings Estimate Revisions Grade takes into account the magnitude of Rithm Capital Corp.'s earnings surprise in its last two reported fiscal quarters.

This grade has been backtested to show a 23.3% annual return since inception for companies with the highest earnings estimate revisions.

In contrast, an example screen following companies with the worst revisions has a backtested annual return of under 5%.

The Quality Grade comes from the ranking of key metrics such as return on assets (ROA), return on invested capital (ROIC), and gross profit relative to assets.

By joining A+ Investor, you can see whether Rithm Capital Corp.'s stock passes any of AAII's 60+ stock screens that have outperformed the market since their creation.

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Rithm Capital Corp.'s Momentum Grade is a key factor to consider when evaluating the stock. The company has a Momentum Score of 66, which is classified as Strong.

The Momentum Score is based on the price change of the stock over a specified period relative to all other stocks. Typically, AAII looks at the weighted relative strength over the trailing four quarters. This involves giving the most recent quarterly price change a weight of 40%, and each of the three previous quarters a weighting of 20%.

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Here's a breakdown of Rithm Capital Corp.'s Relative Price Strength for each quarter:

A Momentum Score of 66 indicates that Rithm Capital Corp. has experienced anomalously high rates of return. Research suggests that stocks with high relative levels of momentum tend to outperform those with low levels of momentum.