Investors in mortgage lender UWM Holdings (UWMC 4.59%) had a February nearly as unpleasant as the weather that month. The company’s shares lost a bit over 10% of their value in the short month, despite the company reporting record loan volumes in its fourth quarter.
A major home financier
UWM is the indirect parent company of Universal Wholesale Mortgage, which, as its name implies, provides mortgages to third-party sellers (mainly brokers). UWM controls the largest wholesaler, so its size and scope are considerable.
Image source: Getty Images.
The company posted its fourth-quarter and full-year results toward the end of the month, divulging that it originated $49.6 billion in home loans during the former period. This was up significantly from the $38.7 billion it earned in the same quarter of 2024. That filtered down to revenue of just over $945 million, for a robust year-over-year gain of 31%.
As for profitability, net income not under generally accepted accounting practices (GAAP) zoomed nearly four times higher to more than $130 million, or $0.08 per share.
Analysts were expecting a higher bottom-line bounce; however, their collective estimate for non-GAAP (adjusted) net income was $0.09 per share. On a brighter note, UWM beat on revenue, as the average prognosticator expectation for that line item was barely over $754 million.
UWM benefited greatly from not one, but two cuts to the Federal Reserve’s key interest rate during the quarter. This significantly ramped up refinancing volume, which almost doubled from both the previous and the year-ago quarters to $30.7 billion.
Surges in key fundamentals didn’t inspire UWM to boost its quarterly dividend. The company declared a $0.10 payout, which matches every one of its 20 previous disbursements. The new one is to be dispensed on April 9 to investors of record as of March 19. At least it’s a high-yield dividend, paying out almost 10% at the most recent closing share price.
UWM Holdings
Today’s Change
(-4.59%) $-0.18
Current Price
$3.85
Key Data Points
Market Cap
$1.1B
Day’s Range
$3.83 – $4.13
52wk Range
$3.79 – $7.14
Volume
1.4M
Avg Vol
18M
Gross Margin
87.45%
Dividend Yield
10.36%
The rate cut blues
UWM also proffered revenue guidance for its first quarter of 2026, which is weeks away from its end. It anticipates it will take in $650 million to $850 million. Although the consensus analyst estimate of slightly over $769 million lies within that range, it’s above the range’s midpoint of $750 million.
The company successfully rode that refinancing wave, and I think investors are mostly disappointed that the currently low chances of rate cuts in 2026 will affect its business. I think it’s got a brighter future than that, particularly given the looming acquisition of mortgage real estate investment trust (mREIT) Two Harbors. And that dividend yield looks rather attractive. I’m not sure I’d consider the stock a sell at this point.