The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how TFS Financial (NASDAQ:TFSL) and the rest of the thrifts & mortgage finance stocks fared in Q3.
Thrifts & Mortgage Finance institutions operate by accepting deposits and extending loans primarily for residential mortgages, earning revenue through interest rate spreads (difference between lending rates and borrowing costs) and origination fees. The industry benefits from demographic tailwinds as millennials enter prime homebuying age, technological advancements streamlining the loan approval process, and potential interest rate stabilization improving affordability. However, significant headwinds include net interest margin compression during rate volatility, increased competition from fintech disruptors offering digital-first experiences, mounting regulatory compliance costs, and potential housing market corrections that could impact loan portfolios and default rates.
The 14 thrifts & mortgage finance stocks we track reported a slower Q3. As a group, revenues beat analysts’ consensus estimates by 1.6% while next quarter’s revenue guidance was 2% below.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 5.8% since the latest earnings results.
Tracing its roots back to 1938 during the Great Depression era when savings and loans were vital to homeownership, TFS Financial (NASDAQ:TFSL) is a savings and loan holding company that provides mortgage lending, deposit services, and other retail banking products primarily in Ohio and Florida.
TFS Financial reported revenues of $84.48 million, up 14% year on year. This print was in line with analysts’ expectations, and overall, it was a satisfactory quarter for the company with EPS in line with analysts’ estimates.
“Third Federal saw record earnings of $91 million in our fiscal year, driven by a continued focus on improving our net interest margin, and an increase in first mortgage and home equity originations,” said Chairman and CEO Marc A. Stefanski.
TFS Financial Total Revenue
Interestingly, the stock is up 5.5% since reporting and currently trades at $14.77.
With roots dating back to 2003 and a focus on the stability of multifamily housing, Arbor Realty Trust (NYSE:ABR) is a specialized lender that provides financing solutions for multifamily and commercial real estate while also originating and servicing government-backed mortgage loans.
Arbor Realty Trust reported revenues of $133.4 million, down 12.1% year on year, outperforming analysts’ expectations by 10.3%. The business had a stunning quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ revenue estimates.
Arbor Realty Trust Total Revenue
The market seems happy with the results as the stock is up 6.3% since reporting. It currently trades at $7.72.
Founded during the 2008 financial crisis when traditional lenders retreated from commercial real estate, Ladder Capital (NYSE:LADR) is a real estate investment trust that originates commercial real estate loans, owns commercial properties, and invests in real estate securities.
Ladder Capital reported revenues of $50.47 million, down 26.4% year on year, falling short of analysts’ expectations by 9.2%. It was a disappointing quarter as it posted a significant miss of analysts’ tangible book value per share and revenue estimates.
Ladder Capital delivered the slowest revenue growth in the group. As expected, the stock is down 7.6% since the results and currently trades at $10.22.
Originating as a small mortgage banking firm during the Great Depression in 1937, Walker & Dunlop (NYSE:WD) provides commercial real estate financing, property sales, appraisal, and investment management services with a focus on multifamily properties.
Walker & Dunlop reported revenues of $340 million, flat year on year. This print missed analysts’ expectations by 1%. Overall, it was a disappointing quarter as it also logged a significant miss of analysts’ tangible book value per share and net interest income estimates.
The stock is down 18.7% since reporting and currently trades at $47.87.
Born in Detroit during the 1980s and evolving into a tech-driven financial powerhouse, Rocket Companies (NYSE:RKT) is a fintech company that provides digital mortgage lending, real estate services, and personal finance solutions through its technology platform.
Rocket Companies reported revenues of $2.44 billion, up 105% year on year. This result surpassed analysts’ expectations by 10.4%. Overall, it was a very strong quarter as it also recorded a beat of analysts’ EPS estimates and an impressive beat of analysts’ revenue estimates.
The stock is down 13.7% since reporting and currently trades at $15.34.
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