UWM (NYSE:UWMC) Announces Quarterly Earnings Results

UWM (NYSE:UWMC) posted its quarterly earnings data on Thursday. The company reported ($0.23) earnings per share (EPS) for the quarter, missing analysts’ consensus estimates of $0.07 by ($0.30), Zacks reports. UWM had a negative net margin of 1.04% and a negative return on equity of 5.61%. The firm had revenue of $888.00 million for the quarter, compared to analysts’ expectations of $727.46 million.

Here are the key takeaways from UWM’s conference call:

• UWM reported strong operating performance, including more than $180 million in operating income and approximately $40 billion of quarterly origination volume, while emphasizing the resilience and growth of the independent broker channel.
• The Oaktree partnership and capital raise of more than $2 billion are expected to fortify UWM’s balance sheet, increase equity to roughly $3 billion, and reduce non-funding debt-to-equity from about 5.6x to approximately 1.2x.
• UWM is suspending its regular dividend to retain capital and strengthen liquidity, though management said special or regular dividends could potentially return after evaluating capital needs each quarter.
• Management acknowledged a substantial, transaction-specific hedge loss tied to the enlarged MSR portfolio acquired in the planned Two Harbors deal and adverse market moves; it said the hedge was removed and does not reflect the core operating business.
• The preferred-equity structure includes 330 million warrants, creating potential future dilution, while the 10% preferred coupon is partly offset by roughly $100 million in interest savings from paying down MSR-related and other debt; servicing expenses are also temporarily elevated during the transition to in-house servicing.

UWM Price Performance

Shares of NYSE UWMC traded down $0.01 during trading on Friday, hitting $1.20. The company had a trading volume of 19,058,594 shares, compared to its average volume of 19,742,043. The company has a market cap of $1.91 billion, a P/E ratio of -14.94 and a beta of 1.78. The company has a debt-to-equity ratio of 3.13, a quick ratio of 1.52 and a current ratio of 1.52. The business’s 50-day moving average is $2.16 and its 200 day moving average is $3.40. UWM has a 52 week low of $0.93 and a 52 week high of $7.14.

Key Stories Impacting UWM

Here are the key news stories impacting UWM this week:

• Positive Sentiment: UWM reported $888 million in second-quarter revenue, above the $727.5 million analyst consensus, while loan origination volume reached $39.7 billion and adjusted EBITDA was $185.9 million. UWM Q2 results
• Positive Sentiment: The planned strategic capital partnership with the Ishbia family and Oaktree is intended to strengthen UWM’s liquidity and reduce its nonfunding debt-to-equity ratio toward 1.2x, potentially improving financial flexibility. UWM capital partnership announcement
• Neutral Sentiment: Unusually heavy options activity saw investors purchase roughly 26,964 call options, about 317% above typical daily volume; this indicates increased speculative interest but does not establish a clear direction for the shares.
• Negative Sentiment: UWM posted a $451.9 million net loss and a loss of $0.23 per share, substantially missing the $0.07-per-share consensus estimate and reversing year-ago profitability. UWM second-quarter results
• Negative Sentiment: The company suspended its dividend and is pursuing more than $2 billion of new capital, with a broader goal of approximately $3 billion of equity. The financing may improve solvency, but preferred securities and warrants could dilute existing shareholders. UWM dividend suspension and capital raise
• Negative Sentiment: Zacks Research downgraded UWMC from “Hold” to “Strong Sell,” adding to the negative reaction to the earnings miss, dividend suspension and recapitalization plans. Zacks Research

Analysts Set New Price Targets

Several brokerages have weighed in on UWMC. Stephens decreased their price objective on shares of UWM from $3.00 to $2.00 and set an “equal weight” rating for the company in a report on Friday. Barclays restated an “overweight” rating and set a $2.00 price objective on shares of UWM in a research note on Friday. Citigroup raised UWM to an “outperform” rating in a research report on Wednesday, July 29th. Morgan Stanley decreased their price objective on shares of UWM from $5.00 to $3.00 and set an “equal weight” rating for the company in a report on Monday, July 20th. Finally, Deutsche Bank Aktiengesellschaft reissued a “hold” rating and set a $5.50 target price on shares of UWM in a report on Thursday, May 7th. Six equities research analysts have rated the stock with a Buy rating, six have assigned a Hold rating and two have assigned a Sell rating to the company’s stock. According to MarketBeat, the stock presently has an average rating of “Hold” and an average target price of $4.10.

Institutional Investors Weigh In On UWM

Hedge funds have recently made changes to their positions in the company. Dimensional Fund Advisors LP increased its stake in UWM by 4.4% during the fourth quarter. Dimensional Fund Advisors LP now owns 55,509 shares of the company’s stock valued at $243,000 after acquiring an additional 2,329 shares during the period. Public Employees Retirement System of Ohio grew its holdings in shares of UWM by 4.9% during the 4th quarter. Public Employees Retirement System of Ohio now owns 51,423 shares of the company’s stock worth $225,000 after purchasing an additional 2,407 shares in the last quarter. Allworth Financial LP increased its position in shares of UWM by 5,681.9% during the third quarter. Allworth Financial LP now owns 4,163 shares of the company’s stock valued at $25,000 after purchasing an additional 4,091 shares during the period. Equitable Holdings Inc. raised its stake in shares of UWM by 26.5% in the third quarter. Equitable Holdings Inc. now owns 23,589 shares of the company’s stock valued at $144,000 after purchasing an additional 4,943 shares in the last quarter. Finally, Advisory Services Network LLC acquired a new stake in UWM during the third quarter worth $38,000. Hedge funds and other institutional investors own 53.59% of the company’s stock.

About UWM

United Wholesale Mortgage (NYSE: UWMC) is a leading mortgage lender in the United States specializing in the wholesale channel. The company partners with independent mortgage brokers, community banks and credit unions to offer a full suite of residential mortgage products. Through its network of third-party originators, United Wholesale Mortgage underwrites, funds and closes loans, allowing its partners to focus on customer acquisition and service.

The company’s product offerings include conventional fixed- and adjustable-rate mortgages, Federal Housing Administration (FHA) loans, Veterans Affairs (VA) loans, U.S.