Better Home & Finance Holding Co (NASDAQ: BETR)

Sector: Financial Services Industry: Mortgage Finance CIK: 0001835856
Market Cap 474.56 Mn
P/B 11.32
P/E -2.56
P/S 3.26
ROIC (Qtr) -29.62
Div Yield % 0.00
Rev 1y % (Qtr) 51.30
Total Debt (Qtr) 553.70 Mn
Debt/Equity (Qtr) 13.21
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About

Better Home & Finance Holding Co, also known as BETRW, operates in the financial services industry with a focus on revolutionizing the homeownership experience. The company aims to make this process seamless, low-cost, and digital, with the customer at the forefront and technology as the backbone. The company's main business activities revolve around providing a digital-first platform for finding, financing, insuring, and selling homes. This platform includes a range of loan products for home purchase and refinance, real estate agent services,...

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Investment thesis

Bull case

  • Strong free cash flow of (223.68M) provides 140.06x coverage of acquisition spending (1.60M), indicating disciplined M&A strategy.
  • Robust R&D investment of 27.68M at 0.33x of SG&A 82.84M demonstrates strong commitment to innovation and future growth.
  • Strong tangible asset base of 1.34B provides 29.07x coverage of intangibles 46.03M, indicating robust asset quality.
  • Strong R&D investment of 27.68M at 3.32x of capex 8.35M shows balanced investment in innovation and infrastructure.
  • R&D investment of 27.68M represents significant 0.84x of receivables 32.88M, indicating innovation-driven growth.

Bear case

  • Operating cash flow of (215.33M) barely covers its investment activities of (621.51M), with a coverage ratio of 0.35, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (621.51M) provide weak support for R&D spending of 27.68M, which is -22.46x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 86.44M provide limited coverage of acquisition spending of (1.60M), which is -54.13x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of (215.33M) shows concerning coverage of stock compensation expenses of 17.50M, with a -12.31 ratio indicating potential earnings quality issues.
  • Operating cash flow of (215.33M) provides minimal -282.59x coverage of tax expenses of 762000, suggesting potential tax planning inefficiencies or unsustainable tax positions.

Peer comparison

Companies in the Mortgage Finance
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 FNMA Federal National Mortgage Association Fannie Mae 45.24 Bn 5,026.67 1.55 4,053.14 Bn
2 RKT Rocket Companies, Inc. 37.92 Bn -371.21 6.57 19.41 Bn
3 FMCC Federal Home Loan Mortgage Corp 27.03 Bn -346.50 1.16 3,405.02 Bn
4 WD Walker & Dunlop, Inc. 1.85 Bn 22.56 3.96 3.01 Bn
5 PFSI PennyMac Financial Services, Inc. 1.63 Bn 113.11 4.21 19.40 Bn
6 VEL Velocity Financial, Inc. 0.71 Bn 7.90 2.27 6.15 Bn
7 BETR Better Home & Finance Holding Co 0.47 Bn -2.56 3.26 0.55 Bn
8 LDI loanDepot, Inc. 0.41 Bn -5.61 0.36 4.51 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.69 -0.29
EV to Cash from Ops. EV/CFO -4.43 -306.56
EV to Debt EV to Debt 1.72 -0.16
EV to EBIT EV/EBIT -5.18 74.08
EV to EBITDA EV/EBITDA -5.76 34.17
EV to Free Cash Flow [EV/FCF] EV/FCF -4.27 16,800.36
EV to Market Cap EV to Market Cap 2.01 19.32
EV to Revenue EV/Rev 6.56 21.05
Price to Book Value [P/B] P/B 11.32 -3.89
Price to Earnings [P/E] P/E -2.56 294.11
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 7.52
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 141.58
Dividend per Basic Share Div per Share (Qtr) 0.00 0.43
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 -7.23
Interest Coverage Int. cover (Qtr) 0.00 -0.52
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -6.86 -24.00
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -63.54 52.20
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.53
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 6.46 10.22
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -1.84 393.39
EBIT Growth (1y) % EBIT 1y % (Qtr) 6.88 -7.84
EBT Growth (1y) % EBT 1y % (Qtr) 6.88 -41.79
EPS Growth (1y) % EPS 1y % (Qtr) -852.34 -5.52
FCF Growth (1y) % FCF 1y % (Qtr) 38.22 -27.18
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 37.23 15.35
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.11 0.11
Cash Payout Ratio Cash Payout (Qtr) 0.00 -0.02
Cash Ratio Cash Ratio (Qtr) 0.00 0.01
Current Ratio Curr Ratio (Qtr) 0.00 0.01
Debt to Equity Ratio Debt/Equity (Qtr) 13.21 15.84
Interest Cover Ratio Int Coverage (Qtr) 0.00 -0.52
Times Interest Earned Times Interest Earned (Qtr) 0.00 -0.52
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -113.80 18.97
EBIT Margin % EBIT Margin % (Qtr) -126.71 -17.72
EBT Margin % EBT Margin % (Qtr) -126.71 -17.90
Gross Margin % Gross Margin % (Qtr) -18.40 72.92
Net Profit Margin % Net Margin % (Qtr) -127.20 -25.85