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UWM Holdings fall forward of Q1 outcomes; rising mortgage charges tamp down demand (NYSE:UWMC) – Searching for Alpha

Mortgage rates business concept of investment housing real estate interest rates 3d home appraisal. planning savings money of coins to buy a home.

Puttachat Kumkrong/iStock by way of Getty Pictures

Puttachat Kumkrong/iStock by way of Getty Pictures
UWM Holdings (NYSE:UWMC) inventory is dropping 5.8% in Monday afternoon buying and selling forward of the mortgage originator’s Q1 earnings launch Tuesday earlier than the market opens. The outcomes will present simply how a lot the mixture of climbing home costs and better mortgage charges is slowing demand for mortgages.
Because the Federal Reserve launched into a coverage tightening cycle to rein in inflation, mortgage charges have risen. Final week, the 30-year fixed-rate mortgage averaged 5.27%, the best since 2009. Throughout Q1 mortgage charges, the typical 30-year FRM fee jumped to ~4.8% from 3.1%.
When the corporate reported This autumn leads to March, it anticipated Q1 manufacturing to be $33B-$42B, down from the $55.2B it originated in This autumn 2021. It anticipated its achieve margin to be between 75 and 85 foundation factors, comparatively steady to This autumn’s 80 bp achieve margin.
The consensus estimate for UWMC’s Q1 EPS is $0.15; up to now month the consensus has been revised up 0.1%, however was revised down 16% over the previous three months. The Q2 EPS consensus estimate has declined 17% up to now month and 32% up to now three months.
The FY2022 EPS consensus has slipped 2.6% up to now month and 19% up to now three months.
SA’s Quant score is Promote, whereas the common Wall Avenue score is Purchase.
One other identify to observe in mortgages is Rocket Firms (RKT), the operator of Rocket Mortgages. It can report earnings after the shut on Tuesday. The consensus estimate for Q1 EPS of $0.19 has been revised down by 0.8% up to now month, by 8.5% up to now three months and by 41% up to now six months. Rocket (RKT) shares are down 2.3% on Monday.
Notice that in February Rocket (RKT) anticipated Q1 closed mortgage quantity of $52B-$57B vs. This autumn’s $75.9B; it additionally guided for Q1 achieve on sale margins of two.80%-3.10% vs. This autumn precise achieve on sale of two.80%.
Quant score additionally flashes Promote; common Wall Avenue score sits at Maintain.
SA contributor BOOX Analysis, after combing by means of Rocket’s (RKT) This autumn outcomes, explains why it is “bullish into low expectations.”

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