Shares of Rithm Capital Corp. RITM have gained 4.4% since it reported strong fourth-quarter results on Feb. 6, 2025. Improved net servicing revenues and interest income contributed to the company’s strong fourth-quarter results. Expanding Newrez business bodes well for the company. Improved asset management revenues also favored the results and are expected to continue thriving through strategic partnerships. Higher expenses partially offset the positives.

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RITM reported fourth-quarter 2024 adjusted earnings of 60 cents per share, which outpaced the Zacks Consensus Estimate by 33.3%. The bottom line rose 17.6% year over year.

Revenues amounted to almost $2.1 billion, which rose nearly three-fold year over year in the quarter under review. The top line also beat the consensus mark by 71%.

RITM’s Q4 Performance

Rithm Capital's net servicing revenues were $1.1 billion, which rose significantly year over year in the fourth quarter and beat the Zacks Consensus Estimate by 180.4% due to changes to the fair value of the MSR portfolio. Interest income increased 7.9% year over year to $490.3 million but missed the consensus mark by 5%.

Gain on originated residential mortgage loans, held for sale, net, rose 105.5% year over year to $201.6 million and beat the consensus estimate by 15.9%. Asset management revenues of $258.9 million surpassed the Zacks Consensus Estimate of $101.2 million

Total expenses of $1 billion increased 28.2% year over year in the quarter under review due to higher interest expenses and warehouse line fees, G&A expenses and compensation and benefits.

RITM’s pretax income was $492.6 million in the fourth quarter against a pre-tax loss of $37.3 million a year ago.

Q4 Segmental Update

Origination and Servicing: Net servicing revenues amounted to $1.1 billion, rising from negative $7.5 million in the prior-year quarter. The segment’s interest income of $341.3 million rose from $138.3 million a year ago. The segment’s revenues of $1.7 billion rose from $228.8 million year over year. Pre-tax income came in at $484.7 million against a pre-tax loss of $120.9 million a year ago.

Investment Portfolio: Interest income was $72.1 million, down from $246.9 million a year ago. Total revenues decreased to $101.7 million from $328.9 million a year ago. Pre-tax loss was $9 million, deteriorating from an income of $112 million in the prior quarter.

Residential Transitional Lending: Revenues of $67.3 million increased from $65.3 million. The unit’s pre-tax income was $3.5 million against a loss of $9.3 million in the prior-year quarter.

Asset Management: Total revenues were $268.5 million in the fourth quarter of 2024. Pre-tax income was $53.4 million in the quarter under review.

Financial Update (as of Dec. 31, 2024)

Rithm Capital exited the fourth quarter with cash and cash equivalents of $1.5 billion, which increased from the 2023-end level of $1.29 billion. Total assets of $45.2 billion rose from $39.72 billion at 2023-end.

Unsecured notes, net of issuance costs, amounted to $1.2 billion, up from around $719 million at 2023-end.

Total equity of $7.9 billion increased from $7.1 billion at 2023-end.

Net cash used in operations was $431.8 million in the first nine months of 2024 against net cash from operations of $1.74 billion a year ago.

Capital-Deployment Update

Rithm Capital did not buy back any shares in 2024. It announced a new share repurchase program of $200 million in common stock that will be in place through Dec. 31, 2025. Management paid out a quarterly common dividend of 25 cents per share, totaling $130.2 million.

Full Year Update

Total revenues of $5.2 billion improved 38.5% year over year in 2024.

Adjusted earnings per share rose 1.9% year over year in 2024.

Zacks Rank

Rithm Capital currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Sector Players

Here are some other Finance sector players that have reported fourth-quarter results so far. The bottom-line results of Virtu Financial, Inc. VIRT, Synchrony Financial SYF and American Express Company AXP beat the respective Zacks Consensus Estimate.

Virtu Financial reported fourth-quarter 2024 adjusted EPS of $1.14, which outpaced the Zacks Consensus Estimate by 32.6%. The bottom line recorded a more than four-fold increase year over year. Adjusted net trading income improved more than 75% year over year to $457.7 million. It beat the consensus estimate by 14.7%. Revenues from commissions, net and technology services amounted to $140.5 million, rising 22.8% year over year. Interest and dividend income of $123.8 million fell from $154.7 million a year ago. 

Adjusted EBITDA jumped to $283.5 million from $99 million a year ago. Adjusted EBITDA margin of 57.5% improved 2,400 bps year over year. In the Market Making segment, adjusted net trading income was $347.9 million in the fourth quarter, up 107.7% year over year. The segment’s revenues rose 67.5% year over year to $706.5 million. The Execution Services unit recorded an adjusted net trading income of $109.8 million, which grew 17.6% year over year. Total revenues of $136.7 million grew 28.3% year over year. 

$Synchrony Financial(SYF-B)$ reported fourth-quarter 2024 adjusted EPS of $1.91, which beat the Zacks Consensus Estimate of $1.90. The bottom line also increased from $1.03 per share a year ago. Net interest income improved 2.7% year over year to $4.6 billion. Retailer share arrangements of Synchrony increased 4.7% year over year to $919 million. Total loan receivables of SYF grew 2% year over year to $104.7 billion. 

Total deposits were $82.1 billion, which rose 1.1% year over year but missed our estimate of $82.5 billion. Provision for credit losses decreased 13.5% year over year to $1.6 billion due to a reserve release. The purchase volume of Synchrony declined 3% year over year to $48 billion in the fourth quarter. Interest and fees on loans of $5.5 billion improved 2.9% year over year. Net interest margin deteriorated nine bps year over year to 15.01%.  New accounts of 5 million slipped 19% year over year. 

American Express reported fourth-quarter 2024 EPS of $3.04, which beat the Zacks Consensus Estimate by a whisker. The bottom line climbed 16% year over year. Total revenues, net of interest expense, amounted to $17.2 billion, which also beat the consensus estimate by a whisker. The top line improved 8.7% year over year. Network volumes of $464 billion rose 7% year over year. Total interest income of $6.1 billion increased 9% year over year.

Provision for credit losses declined 10% year over year to $1.3 billion.  The U.S. Consumer Services segment’s pre-tax income of $1.5 billion improved 5% year over year. Total revenues, net of interest expense, climbed 12% year over year to $8.3 billion. The Commercial Services segment recorded a pre-tax income of $814 million, which rose 22% year over year. Total revenues, net of interest expense, amounted to $4.1 billion, which grew 8% year over year.

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