Why Rocket Stock Soared Today | The Motley Fool

What happened

Shares of Rocket Companies (NYSE:RKT) popped 9.8% on Friday after the mortgage giant delivered a blockbuster fourth-quarter report.  

So what

The parent company of Quicken Loans and Rocket Mortgage made a boatload of cash in 2020 — so much so that it announced a $1.11 per share special dividend. That represents a roughly 5% yield on Rocket Companies’ current share price of $21.85.

The mortgage leader’s revenue surged 144% year over year to $4.7 billion, fueled by a 111% rise in loan originations. Rocket benefited from a surprisingly strong housing market during the coronavirus pandemic. Historically low interest rates also helped to boost demand for refinancing.

Rocket Companies’ stock price rose sharply on Friday. Image source: Getty Images.

Rocket’s profits were breathtaking. Its net income soared 277% to a staggering $2.8 billion.

“Rocket Companies’ record-breaking fourth-quarter and full-year 2020 results demonstrate the sheer power of the technology platform we have built and refined for more than two decades,” CEO Jay Farner said in a press release. “In the midst of a pandemic, we successfully drove growth in every segment of our business.”

Now what 

In addition to handing out cash to its shareholders, Rocket plans to use some of its bountiful cash flow production to ramp up its growth investments.

“As more and more consumers shift their preferences toward an increasingly digital experience, we are better positioned than ever to provide them with innovative, technology-driven solutions that simplify even the most stressful and complex transactions,” Farner said.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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