A month has gone by since the last earnings report for Rithm (RITM). Shares have added about 0.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Rithm due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Rithm Capital Q2 Earnings Beat Estimates, Revenues Up Y/Y
Rithm Capital posted second-quarter 2026 earnings available for distribution of 60 cents per share, beating the Zacks Consensus Estimate of 50 cents. The figure increased 11.1% from 54 cents in the prior-year quarter.
Quarterly results reflected higher asset management revenues, interest income and commercial real estate revenues. Strong residential transitional lending originations were other positives. However, lower servicing revenues and higher operating expenses were the undermining factors.
Net income attributable to common stockholders (GAAP) was $20.2 million, down 92.9% from $283.9 million in the prior-year quarter.
Revenues & Expenses Increase
Total revenues were $1.28 billion, up 5.4% year over year. The metric missed the Zacks Consensus Estimate of $1.46 billion by 12.1%.
Rithm Capital’s total operating expenses were $1.28 billion, up 34% year over year.
Segment Performance & Business Momentum
Newrez posted pre-tax operating income of $307.6 million in the second quarter, excluding MSR mark-to-market loss, net of hedges, and other non-operating items of $194.5 million. This rose 11.8% from $275.1 million in the prior-year quarter.
Newrez generated a 22% annualized operating return on equity on $5.7 billion of average ending segment equity.
The total servicing unpaid principal balance reached $865.2 billion at the end of the quarter, including $268.4 billion in third-party servicing. Funded origination volume was $15.9 billion, down 2% year over year.
Genesis Capital recorded second-quarter origination volume of $1.9 billion, up 52% year over year and marking its strongest origination quarter. Genesis expanded its sponsor base by funding 125 new sponsors during the quarter, marking an increase of 46% year over year.
Rithm Asset Management had approximately $61 billion in assets under management as of June 30, 2026, up 69.4% from approximately $36 billion in the prior-year quarter. The increase was driven by $1.9 billion in gross inflows and new fund commitments.
Asset management revenues were approximately $141 million, up 48.4% year over year, driven by higher incentive fee income.
Balance Sheet Expands
As of June 30, 2026, total assets were $54.11 billion, up 22.1% from $44.32 billion at June 30, 2025. Cash, cash equivalents and restricted cash increased 17.7% to $2.45 billion from $2.09 billion in the year-ago quarter.
Outlook
For 2026, management expects Genesis to generate $6.5-$7 billion of production and $150-$175 million of EBITDA.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -7.32% due to these changes.
VGM Scores
Currently, Rithm has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a score of B on the value side, putting it in the second quintile for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Rithm has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Rithm belongs to the Zacks Financial - Miscellaneous Services industry. Another stock from the same industry, Moody's (MCO), has gained 6.5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.
Moody's reported revenues of $2.19 billion in the last reported quarter, representing a year-over-year change of +15.1%. EPS of $4.68 for the same period compares with $3.56 a year ago.
Moody's is expected to post earnings of $4.26 per share for the current quarter, representing a year-over-year change of +8.7%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Moody's. Also, the stock has a VGM Score of D.
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This article originally published on Zacks Investment Research (zacks.com).