Rithm Capital Corp. RITM is set to report third-quarter 2024 results on Oct. 29, 2024, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at 43 cents per share on revenues of $1.11 billion. 

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The third-quarter earnings estimate has remained stable over the past 60 days. The bottom-line projection indicates a year-over-year plunge of 25.9%. However, the Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 2.3%.

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For the current year, the Zacks Consensus Estimate for Rithm Capital’s revenues is pegged at $4.79 billion, implying a rise of 32.2% year over year. However, the consensus mark for current year EPS is pegged at $1.81, implying a fall of around 12.1% on a year-over-year basis.

Rithm Capital beat the consensus estimate in each of the last four quarters, with the average surprise being 36.3%.

Q3 Earnings Whispers for RITM

However, our proven model does not conclusively predict an earnings beat for the company this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. That’s not the case here.

RITM has an Earnings ESP of -1.18% and a Zacks Rank #4 (Sell).

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What’s Shaping RITM’s Q3 Results?

Higher fees, interest income and multiple acquisitions are expected to have supported its revenue growth. The favorable interest rate environment is expected to have supported Rithm in generating enhanced returns from specific investments and consumer loans. The Zacks Consensus Estimate for third-quarter interest income indicates 2.3% year-over-year growth.

The growing profitability of its Newrez business is likely to have aided its Origination & Servicing segment. Also, the Zacks Consensus Estimate for third-quarter net gain on originated residential mortgage loans indicates a 12.6% year-over-year increase.

The above-mentioned factors are expected to have positioned the company for year-over-year growth in revenues. However, the consensus mark for net servicing revenues implies a 32.1% fall from the prior-year figure. The consensus mark for asset management revenues is pegged at $85.1 million, sequentially down from $109.4 million.

Also, the high interest rates are likely to have increased its interest expense and warehouse line fees in the quarter under review. Higher general and administrative expenses, compensation and benefits are likely to have increased total expenses, slashing profits. This makes an earnings beat uncertain. Nevertheless, its hedging strategies are likely to have provided some protection from the burden of increasing interest expenses.

RITM’s Price Performance

Rithm Capital's stock has declined 1.2% year to date, underperforming the industry’s growth of 9%. Some of its peers, like Annaly Capital Management, Inc. NLY and AGNC Investment Corp. AGNC,have gained 0.8% and 1.7%, respectively, during this time. All these stocks have lagged the S&P 500 significantly, which has rallied 21.5% during the same period.

Investors should monitor Rithm’s upcoming financial results to assess potential shifts in its price performance and overall outlook.

RITM’s YTD Price Performance

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