Recent trading in Rocket Companies (RKT) has been shaped by a mix of company specific and sector wide forces, including elevated options activity ahead of earnings and sentiment shifts tied to housing data and Zillow’s recent results.

At a share price of $18.68, Rocket Companies has seen a 5.24% 1 day share price gain but a 17.60% 30 day share price decline, even as its 1 year total shareholder return of 50.69% and 3 year total shareholder return of 126.89% point to stronger longer term momentum. This momentum has been periodically shaken by sector sentiment around housing affordability, Zillow’s results and upcoming earnings.

If this kind of housing and mortgage volatility has your attention, it could be a good moment to see what else is moving through our 23 top founder-led companies.

With the shares at $18.68, a 15% discount to the average analyst price target of $21.57, and recent earnings, legal and sector headlines in the mix, are you looking at a genuine opening, or a market already pricing in future growth?

Most Popular Narrative: 53.3% Undervalued

Compared with the last close at $18.68, the most followed narrative assigns Rocket Companies a fair value of $40.00, implying a large upside in that storyline.

Recent Mr. Cooper and Redfin acquisitions prop up the company to become a mortgage conglomerate. Users will be able to one-stop-shop for homes and mortgages through the Redfin or Rocket Mortgage apps. While housing supply is limited (but increasing) housing prices are only going up, and usage of Redfin as an agent will allow Rocket Companies to earn revenue on all fees related to home buying, from selling/buying agent fees to mortgage interest and maintenance fees. Rocket is in an extremely unique position to benefit from an increased OR decreased interest rate, to benefit from an increase in housing supply OR continued supply plateau, and to benefit from any housing uncertainty in the future. Anyone who's been watching knows that people are going to need to buy and sell homes no matter the conditions of the market, and the business being US-based shields Rocket from any potential tariffs or other political issues. I believe this is a unique entry point for a company that will grow consistently for years to come. I also believe we will see 14b gross revenue in 2 years time.

Curious how a mortgage platform plus real estate acquisition story can justify more than double the current price? The narrative leans on aggressive revenue expansion, rising profitability and a rich future earnings multiple to back that $40.00 figure. The exact growth, margin and valuation assumptions sit in the full write up, according to nader.

Result: Fair Value of $40.00 (UNDERVALUED)

However, this story could be knocked off course if integration of the Mr. Cooper and Redfin deals proves slower, or if housing transaction volumes soften more than expected.

Build Your Own Rocket Companies Narrative

If you are not on board with that view or prefer to lean on your own work, you can build a data backed narrative in a few minutes starting with Do it your way.

A great starting point for your Rocket Companies research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

If Rocket Companies has sparked your interest, do not stop here. The right next idea could be sitting in plain sight and you may want a front row seat.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.