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The Consensus EPS Estimates For Rocket Companies, Inc. (NYSE:RKT) Just Fell Dramatically

Market forces rained on the parade of Rocket Companies, Inc. (NYSE:RKT) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the latest downgrade, the current consensus, from the eleven analysts covering Rocket Companies, is for revenues of US$7.4b in 2022, which would reflect a concerning 34% reduction in Rocket Companies' sales over the past 12 months. Statutory earnings per share are presumed to bounce 325% to US$0.51. Previously, the analysts had been modelling revenues of US$9.1b and earnings per share (EPS) of US$1.04 in 2022. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.

View our latest analysis for Rocket Companies

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earnings-and-revenue-growth

It'll come as no surprise then, to learn that the analysts have cut their price target 14% to US$11.00. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Rocket Companies analyst has a price target of US$19.00 per share, while the most pessimistic values it at US$8.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Rocket Companies' past performance and to peers in the same industry. We would also point out that the forecast 43% annualised revenue decline to the end of 2022 is roughly in line with the historical trend, which saw revenues shrink 41% annually over the past year By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 3.7% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Rocket Companies to suffer worse than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Rocket Companies. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Rocket Companies' revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Rocket Companies.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Rocket Companies going out to 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.