Wrapping up Q2 earnings, we look at the numbers and key takeaways for the thrifts & mortgage finance stocks, including Franklin BSP Realty Trust (NYSE: FBRT) and its peers.

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 19 thrifts & mortgage finance stocks we track reported a slower Q2. As a group, revenues missed analysts’ consensus estimates by 26.9% while next quarter’s revenue guidance was in line.

In light of this news, share prices of the companies have held steady as they are up 1.2% on average since the latest earnings results.

Franklin BSP Realty Trust (NYSE: FBRT)

Operating as a specialized real estate investment trust (REIT) with roots dating back to 2012, Franklin BSP Realty Trust (NYSE: FBRT) originates and manages a diversified portfolio of commercial real estate debt investments secured by properties in the United States and abroad.

Franklin BSP Realty Trust reported revenues of $50.78 million, up 171% year on year. This print fell short of analysts’ expectations by 8.9%. Overall, it was a disappointing quarter for the company with a significant miss of analysts’ revenue and net interest income estimates.

Franklin BSP Realty Trust pulled off the fastest revenue growth of the whole group. Unsurprisingly, the stock is up 4.8% since reporting and currently trades at $10.57.

Read our full report on Franklin BSP Realty Trust here, it’s free for active Edge members.

Best Q2: Ellington Financial (NYSE: EFC)

Operating under the guidance of Ellington Management Group, a respected name in structured credit markets, Ellington Financial (NYSE: EFC) acquires and manages a diverse portfolio of mortgage-related, consumer-related, and other financial assets to generate returns for investors.

Ellington Financial reported revenues of $92.54 million, up 1.5% year on year, outperforming analysts’ expectations by 11.5%. The business had a stunning quarter with an impressive beat of analysts’ revenue estimates and a solid beat of analysts’ tangible book value per share estimates.

The market seems happy with the results as the stock is up 7.2% since reporting. It currently trades at $13.58.

Is now the time to buy Ellington Financial? Access our full analysis of the earnings results here, it’s free for active Edge members.

Ready Capital (NYSE: RC)

Operating as one of only 17 non-bank Small Business Lending Companies with preferred lender status from the SBA, Ready Capital (NYSE: RC) is a multi-strategy real estate finance company that originates, acquires, and services commercial real estate loans, small business loans, and other real estate investments.

Ready Capital reported revenues of -$26.37 million, up 29.4% year on year, falling short of analysts’ expectations by 155%. It was a disappointing quarter as it posted a significant miss of analysts’ tangible book value per share and revenue estimates.

Ready Capital delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 16.8% since the results and currently trades at $3.53.

Read our full analysis of Ready Capital’s results here.

WaFd Bank (NASDAQ: WAFD)

Founded in 1917 and rebranded from Washington Federal in 2023, WaFd (NASDAQ: WAFD) is a bank holding company that provides lending, deposit services, and insurance through its Washington Federal Bank subsidiary across eight western states.

WaFd Bank reported revenues of $186.3 million, down 4.2% year on year. This number surpassed analysts’ expectations by 1.8%. It was a strong quarter as it also produced a decent beat of analysts’ revenue estimates and a beat of analysts’ EPS estimates.

The stock is down 3.4% since reporting and currently trades at $28.73.

Read our full, actionable report on WaFd Bank here, it’s free for active Edge members.

Rocket Companies (NYSE: RKT)

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 $1.36 billion, up 4.6% year on year. This result beat analysts’ expectations by 5.8%. Overall, it was a very strong quarter as it also put up a beat of analysts’ EPS and revenue estimates.

The stock is up 10.9% since reporting and currently trades at $16.38.

Read our full, actionable report on Rocket Companies here, it’s free for active Edge members.

Market Update

As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.

Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.