• If you are wondering whether Rocket Companies stock is priced attractively today, the starting point is understanding how its current share price lines up against several valuation checks.
• The stock closed at US$12.94, with the share price down 9.3% over the past week, 7.6% over the past month and 34.9% year to date, while still showing a 3.8% gain over the last year and a 59.7% gain over three years, but down 32.3% over five years.
• Recent coverage around Rocket Companies has focused on its position as a large US mortgage and financial services platform, which often ties investor sentiment to shifts in housing activity, refinancing trends and interest rate expectations. These themes can influence how the market reacts to Rocket Companies stock, especially when conditions in the housing and credit markets change.
• On Simply Wall St's valuation checklist, Rocket Companies currently scores 2 out of 6. Next you will see how methods like P/E, P/S and discounted cash flow assess the stock, before finishing with a broader way to think about valuation that ties all of these signals together.

Rocket Companies scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Rocket Companies Excess Returns Analysis

The Excess Returns model evaluates how much profit a company is expected to generate above the return that shareholders require, then capitalizes those “excess” profits into an intrinsic value per share.

For Rocket Companies, the model uses a Book Value of $8.22 per share and a Stable EPS of $0.97 per share, based on weighted future Return on Equity estimates from 4 analysts. The Average Return on Equity is 10.18%, while the Cost of Equity is $0.82 per share. The gap between these, an Excess Return of $0.15 per share, represents the value the company is expected to create beyond its equity cost.

The analysis also factors in a Stable Book Value of $9.49 per share, sourced from weighted future Book Value estimates from 4 analysts, to estimate how those excess returns may accumulate over time. This Excess Returns valuation points to an intrinsic value of about $12.44 per share, which implies the stock is around 4.0% overvalued compared with the recent share price of $12.94.

Result: ABOUT RIGHT

Rocket Companies is fairly valued according to our Excess Returns, but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Approach 2: Rocket Companies Price vs Sales

For profitable companies that generate meaningful revenue, the P/S multiple can be a useful way to compare what investors are paying for each dollar of sales, especially when earnings are volatile or affected by non cash items.

In general, higher growth expectations and lower perceived risk tend to justify a higher “normal” P/S ratio, while slower growth or higher risk usually call for a lower one. For Rocket Companies, the current P/S ratio is 4.11x. This is above the Diversified Financial industry average P/S of 2.08x and also above the peer average of 0.91x.

Simply Wall St’s Fair Ratio concept estimates what a company’s preferred multiple might be, given factors like its earnings growth profile, profit margins, industry, market cap and specific risks. Because it adjusts for these company level characteristics, the Fair Ratio can be more informative than a simple comparison with peers or the broad industry. Rocket Companies has a Fair Ratio of 5.17x, which sits above the current P/S of 4.11x. On this basis, the stock screens as undervalued on a P/S basis.

Result: UNDERVALUED

Wall Street's queuing for one rocket. While SpaceX counts down to its IPO, other companies tied to the new space race are already in orbit. → 20 Compelling Space Companies watchlist · Global Space Race Investing Ideas screener · Scan the sector by valuation on Rocket Lab's valuation page.

Upgrade Your Decision Making: Choose your Rocket Companies Narrative

Earlier the article mentioned that there is an even better way to understand valuation. Narratives let you turn your view of Rocket Companies into a simple story that connects your assumptions about future revenue, earnings and margins to a forecast and a Fair Value that you can directly compare with today’s price. All of this happens inside the Simply Wall St Community page, where Narratives automatically update as new news or earnings arrive. This is why one Rocket Companies Narrative on the platform might see the stock as worth US$16.50, while another, using different assumptions and a different story about the Redfin and Mr. Cooper acquisitions and AI investments, arrives at a Fair Value of US$25.00.

Do you think there's more to the story for Rocket Companies? Head over to our Community to see what others are saying!

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.