New Residential Investment Q2 2022 Earnings Preview
Aug. 01, 2022 12:57 PM ETRithm Capital Corp. (RITM)By: Urvi Shah, SA News Editor16 Comments
- With macro headwinds leading to reduced returns from the U.S. REITs industry, will New Residential Invetsment (NYSE:NRZ) post a Q2 consensus beat and see stock prices go up?
- The mortgage REIT is scheduled to announce Q2 earnings results on Tuesday, August 2nd, before market open.
- Factors to consider: Mortgage rates currently stand roughly on par with those seen from 2003 to 2007 before the 2008 great recession with 30-Yr FRM rates rising sharply from 3.01% about 1 year ago to the current 5.3%. Higher interest rates will squeeze profits while higher borrowing rates have weakened as houses are less affordable.
- Record Inflation: U.S. hit a 40-year record high of 9.1% inflation, which could make it difficult for homeowners to service their mortgages, creating the potential for delinquencies or even foreclosure, leading to book value losses.
- Housing Bubble: Fed in response to the COVID-19 lowered the fund's rate to a range of 0% to 0.25% leading to higher housing demand and driving up prices as a result of the need for remote employment. As interest rates have started reverting, the housing market weakened leading to an increase in delinquencies or even foreclosure, which will lead to book value losses.
- Peers: Annaly Capital Management book value dropped 13% during Q2 and turned in a 9.6% negative economic return as spread widened and rate volatility continued to roil markets as sentiment shifted to risk-off.
- AGNC Investment stock dropped 3.3% Monday after-hours after net book value declined with weakness in the agency mortgage-backed securities market, resulting in a negative economic return on tangible common equity.
- EPS Estimate is $0.31 (flat Y/Y) and the consensus Revenue Estimate is $1.12B (+146.7% Y/Y).
- has beaten EPS estimates 63% of the time and has beaten revenue estimates 50% of the time.
- upward revision and 6 downward. Revenue estimates have seen 2 upward revisions and 3 downward.