Rocket Companies stock rallies to snap losing streak on ‘special dividend’ record date

That record one-day gain capped a more-than doubling in three days (up 109.0%), after the company reported better-than-expected fourth-quarter results and announced a one-time dividend of $1.11 a share. The company doesn’t pay a regular dividend.

Rocket said that the “special dividend” will be payable on March 23, to shareholders of record at the close of business on March 9. Given that equities trades settle in two business days, buyers of stocks one day before the record date, known as the ex-dividend date, will not receive the dividend.

Morgan Stanley analyst James Faucette reiterated the equal weight rating he initiated coverage of Rocket with in August 2020, when the company went public, but lifted his price target to $24 from $23.

“We think that capital returns — especially dividends — will be a key source of investor returns until investors develop more confidence in a stronger-for-longer mortgage market, and/or faster-than-expected market share gains, and/or sustainably better gain-on-sale margins,” Faucette wrote in a note to clients.

When Faucette asked Rocket Chief Executive Jay Farner at last week’s Morgan Stanley Technology, Media and Telecom conference for comment on the stock’s recent trading activity, Farner said it had been a “really interesting” few days.

Faucette indicated that based on average multiples for forward earnings for the S&P 500 companies, even at the March 2 high in price — the intraday high that day was $43.00 — that many Wall Street analysts would think the stock’s valuation would be below average.

“So, you know how we feel, which is 25 years in the business, all the investment we’re making we are very bullish on where Rocket Companies is headed and we’ll keep making all the right decisions to continue to grow the company,” Farner said, according to a FactSet transcript.

The stock has climbed 21.7% over the past three months, while the S&P 500 index SPX, +1.91% has tacked on 6.2%.