Connect with us

Hi, what are you looking for?

Economy

Rithm Capital (RITM) added to Wedbush Best Ideas List

Investing.com — Wedbush analysts added Rithm Capital (RITM) to their Best Ideas List in a note Wednesday, highlighting the company as their top pick within the mortgage real estate investment trust (mREIT) sector.

According to Wedbush, Rithm Capital stands out for its unique business model, which sets it apart from its peers and could justify a higher valuation.

“We believe that RITM offers a unique business model that is unlike any of its mREIT peers, which should warrant a differing view on valuation,” they wrote.

Rithm Capital currently trades near the higher end of its residential at-risk peers on a price-to-book (P/B) basis.

However, Wedbush analysts argue that this valuation does not fully capture the strength of Rithm’s NewRez business, which represents approximately 45% of the company’s adjusted book value.

They note that NewRez is one of the largest mortgage platforms in the U.S., making it more comparable to servicing-oriented mortgage companies like Mr. Cooper and PennyMac, both of which trade at a P/B premium relative to Rithm.

“We believe that a more appropriate comp group for this segment of the business would be other servicing-oriented mortgage companies like Mr. Cooper (COOP, OP) and PennyMac (PFSI, OP), which both trade at relative P/B premiums,” adds the firm.

Looking ahead, Wedbush analysts are optimistic about Rithm’s long-term potential. The company has plans to evolve into a large-scale alternative asset manager, which could provide significant upside to its current valuation.

Additionally, they note that Rithm offers an attractive dividend yield of approximately 8.5%, adding further appeal to the stock as an investment.

In light of these factors, Wedbush raised its price target for Rithm Capital to $14 (albeit from $13 a share), reflecting a 1.13x multiple on the most recent quarter’s book value.

“Over the longer term, the company envisions becoming a large scale alt. asset manager, which could provide even greater upside to current levels,” according to Wedbush.

This post appeared first on investing.com

You May Also Like

Investing

Fisker (NYSE: FSR) stock price has been one of the best-performing electric vehicle (EV) stocks this week even as Tesla slumped. The shares jumped...

Investing

Newmont (NYSE: NEM) reported mixed financial results even as the price of gold approached its all-time high. In all, the company’s earnings per share...

Investing

The Fox Corporation (NASDAQ: FOX) stock price has been under pressure as investors come to terms with the abrupt firing of Tucker Carlson. The...

Investing

NatWest (LON: NWG) share price rose sharply, helped by the strong results from Barclays. The stock jumped to a high of 274.8p, which was...




Disclaimer: Oldamericanbroker.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the-company.


Copyright © 2024 Oldamericanbroker.com