Rocket Companies, formerly Quicken Loans is a firm that focuses on loans. Interest rates are all the way down, the economy is down, but the company is doing fantastic.
Why? It gives out loans, and one of its core products is housing. But there’s a deeper story here, it’s technology forward approach is compelling.
While there are companies innovating in the mortgage indsutry, Rocket Companies looks like it has the ability to do so at scale with experience and deep expertise. How do you should you think about this public company?
Let’s take a further look at Rocket Companies and why it matters.
Home Buying and Loans is a Constant
How do you win in any age-old industry? Simple, you offer something better and make sure that people know about you. If you can do that in an industry that will continue to succeed over the long-term while avoiding unethical behavior (or at least, getting caught for unethical behavior), you should do quite well.
That’s the story here with Rocket Companies.
From investing digital marketing to reach people over the world wide web to streamlining the tedious process of getting mortgages, Rocket Companies seems like it is leading the mortgage industry pack.
It seems as if more people are gravitating to the Rocket Companies platform with Q2 2020 earnings double that of 2019 adjusted profits. What is going on here? That’s resounding success during a pandemic, right?
Yes, look to their superordinate goals mixed with interest rates, at decade lows. What’s even more compelling here is that shares aren’t crazy valuations, and there were no crazy IPO stock pop events here either. That’s surprising, as this is an entity that is known for digitizing mortgages. There’s real value in simplifying the mortgage process and serving as a trusted partner that provides seamless experiences.
Rocket Companies (the mortgage division) took one percent of the market after the financial crisis and steadily grew its position; it stands close to ten percent today. Apart from mortgages, you can find it in auto financing, personal loans, and other loans.
The Online Transformation
Rocket Mortgage came about in 2015 due to future forward-thinking in the past and eye toward technology investment to improve customer experiences. The idea here is that you don’t have to wait to go in person to conduct your mortgage needs, you can sign online, view statements, and pay your monthly note online.
The value with Rocket Mortgages is that the whole process is more efficient, while competitors still have cumbersome steps the individual consumer must take on.
That attention to detail is why the company has been able to originate more than $20 billion just a decade ago, with origination volumes reaching more than $140 billion in 2019.
Guess how many people visited its sites in 2019? 74 million.
Acquisitions as Growth Strategy
In my view, if they can continue to focus on technology and understand how it will change the landscape, they’ll continue to hold a strong position in the market.
Dan Gilbert, the CEO of the firm, did note that Rocket Companies does plan on looking at acquiring fintech companies and increasing their portfolio of technology forward holdings.
Risks for Rocket Companies
Still, while it is growing its business and investing in the right activities. It carries considerable debt, does face risks in the slowing economy and growing delinquencies, and other economic factors might show a near-term decrease in sales and earnings.