As the Q1 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the thrifts & mortgage finance industry, including TFS Financial (NASDAQ: TFSL) 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 Q1. As a group, revenues missed analysts’ consensus estimates by 27.5% 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 3.6% on average since the latest earnings results.

TFS Financial (NASDAQ: TFSL)

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 $77.62 million, flat year on year. This print exceeded analysts’ expectations by 2.2%. Overall, it was a satisfactory quarter for the company with an impressive beat of analysts’ net interest income estimates but EPS in line with analysts’ estimates.

“Our second quarter earnings reflect our ability to successfully operate in any economic climate,” said Chairman and CEO Marc A. Stefanski.

Unsurprisingly, the stock is down 1.7% since reporting and currently trades at $13.22.

Is now the time to buy TFS Financial? Access our full analysis of the earnings results here, it’s free.

Best Q1: 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’ tangible book value per share estimates and a beat of analysts’ EPS estimates.

The market seems happy with the results as the stock is up 9.6% since reporting. It currently trades at $13.88.

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

Weakest Q1: 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, falling short of analysts’ expectations by 8.9%. It was a disappointing quarter as it posted a significant miss of analysts’ net interest income and EPS estimates.

Interestingly, the stock is up 11% since the results and currently trades at $11.20.

Read our full analysis of Franklin BSP Realty Trust’s results here.

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 10.8% year on year. This number topped analysts’ expectations by 5.8%. It was a very strong quarter as it also logged a beat of analysts’ EPS estimates and an impressive beat of analysts’ tangible book value per share estimates.

The stock is up 21% since reporting and currently trades at $17.86.

Read our full, actionable report on Rocket Companies here, it’s free.

Mr. Cooper Group (NASDAQ: COOP)

Born from the 2018 merger of Nationstar Mortgage and WMIH Corp, Mr. Cooper Group (NASDAQ: COOP) is a non-bank servicer of residential mortgage loans that collects payments, manages escrow funds, and performs loss mitigation activities for 4.6 million customers.

Mr. Cooper Group reported revenues of $608 million, up 18.2% year on year. This print lagged analysts' expectations by 10.5%. Overall, it was a softer quarter as it also produced a significant miss of analysts’ EPS estimates and a slight miss of analysts’ tangible book value per share estimates.

The stock is up 9% since reporting and currently trades at $185.24.

Read our full, actionable report on Mr. Cooper Group here, it’s free.

Market Update

In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.

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