Rithm Capital Corp. (NYSE: RITM)

Sector: Real Estate Industry: REIT - Mortgage CIK: 0001556593
Market Cap 5.69 Bn
P/B 0.67
P/E 7.32
P/S 1.14
ROIC (Qtr) 6.32
Div Yield % 11.47
Rev 1y % (Qtr) 13.45
Total Debt (Qtr) 34.97 Bn
Debt/Equity (Qtr) 4.12

About

Rithm Capital Corp., known by its ticker symbol RITM, is a company that operates in the real estate, credit, and financial services industry. The company has a diverse range of business activities, which include origination and servicing, investment portfolio, mortgage loans receivable, asset management, and corporate activities. Rithm Capital was established as a limited liability company in September 2011 and has since grown to become a significant player in the mortgage origination and servicing market in the U.S. Rithm Capital's primary business...

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Price action

Investment thesis

Bull case

  • Cash position of 2.16B provides exceptional 125.78x coverage of minority interest expenses 17.18M, indicating strong liquidity.
  • Free cash flow of (2.93B) provides excellent 4.63x coverage of dividends (632.70M), indicating sustainable shareholder returns.
  • Tangible assets of 47.17B provide robust 17.82x coverage of receivables 2.65B, showing strong asset quality.

Bear case

  • Operating cash flow of (2.93B) barely covers its investment activities of 884.73M, with a coverage ratio of -3.31, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of (2.93B) provides minimal -16.92x coverage of tax expenses of 173.23M, suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Free cash flow of (2.93B) represents just -1.39x of debt issuance 2.11B, suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of (2.93B) shows concerning coverage of minority interest expenses of 17.18M, which is -170.55x, suggesting complex corporate structure risks.
  • Operating cash flow of (2.93B) is outpaced by equity issuance of 398.58M (-7.35 ratio), indicating concerning reliance on equity markets for funding operations.

Peer comparison

Companies in the REIT - Mortgage
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NLY Annaly Capital Management Inc 13.57 Bn 10.12 7.94 107.02 Bn
2 AGNC AGNC Investment Corp. 11.33 Bn 16.49 30.46 95.01 Bn
3 STWD Starwood Property Trust, Inc. 6.34 Bn 17.32 3.51 21.43 Bn
4 RITM Rithm Capital Corp. 5.69 Bn 7.32 1.14 34.97 Bn
5 BXMT Blackstone Mortgage Trust, Inc. 3.26 Bn 30.37 6.41 15.46 Bn
6 ARR Armour Residential REIT, Inc. 1.84 Bn 35.07 15.78 16.56 Bn
7 DX Dynex Capital Inc 1.60 Bn 9.10 6.93 11.75 Bn
8 ABR Arbor Realty Trust Inc 1.50 Bn 9.82 2.84 10.40 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.79 0.83
EV to Cash from Ops. EV/CFO -12.65 -102.96
EV to Debt EV to Debt 1.06 1.31
EV to EBIT EV/EBIT 34.47 -260.73
EV to EBITDA EV/EBITDA 13.33 -16.37
EV to Free Cash Flow [EV/FCF] EV/FCF -12.65 3.47
EV to Market Cap EV to Market Cap 6.52 9.18
EV to Revenue EV/Rev 7.44 26.77
Price to Book Value [P/B] P/B 0.67 0.68
Price to Earnings [P/E] P/E 7.32 -4.85
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.03 -0.55
Dividend Payout Ratio % Div Payout % (Qtr) 67.10 29.47
Dividend per Basic Share Div per Share (Qtr) 1.00 1.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -18.49 57.60
Interest Coverage Interest Coverage 0.00 -0.17
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 0.00 37.60
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 11.07 24.22
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 4.53
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 56.58 17.83
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 13.07 9.86
EBIT Growth (1y) % EBIT 1y % (Qtr) 59.88 20.98
EBT Growth (1y) % EBT 1y % (Qtr) 59.88 11.17
EPS Growth (1y) % EPS 1y % (Qtr) 49.00 59.25
FCF Growth (1y) % FCF 1y % (Qtr) -98.19 59.63
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 15.53 20.65
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.11 0.04
Cash Payout Ratio Cash Payout (Qtr) -0.21 0.83
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.00
Debt to Equity Ratio Debt/Equity (Qtr) 4.12 5.05
Interest Cover Ratio Interest Cover Ratio 0.00 -0.17
Times Interest Earned Times Interest Earned 0.00 -0.17
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 21.60 137.11
EBIT Margin % EBIT Margin % (Qtr) 21.60 142.19
EBT Margin % EBT Margin % (Qtr) 21.60 129.16
Gross Margin % Gross Margin % (Qtr) 100.00 117.97
Net Profit Margin % Net Margin % (Qtr) 15.60 125.89