NYSE:RWT

Stock Analysis Report

Executive Summary

Redwood Trust, Inc., together with its subsidiaries, operates as a specialty finance company in the United States.


Snowflake Analysis

Established dividend payer and fair value.


Similar Companies

Share Price & News

How has Redwood Trust's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: RWT has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-4.0%

RWT

-5.7%

US Mortgage REITs

-7.6%

US Market


1 Year Return

9.5%

RWT

2.1%

US Mortgage REITs

10.2%

US Market

Return vs Industry: RWT exceeded the US Mortgage REITs industry which returned 2.1% over the past year.

Return vs Market: RWT matched the US Market which returned 10.2% over the past year.


Shareholder returns

RWTIndustryMarket
7 Day-4.0%-5.7%-7.6%
30 Day-4.6%-1.2%-4.5%
90 Day3.6%2.9%-0.6%
1 Year17.9%9.5%13.2%2.1%12.5%10.2%
3 Year26.0%1.5%37.8%-0.4%37.1%28.3%
5 Year28.0%-11.7%65.3%-5.1%60.8%43.2%

Price Volatility Vs. Market

How volatile is Redwood Trust's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Redwood Trust undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: RWT ($16.76) is trading below our estimate of fair value ($37.65)

Significantly Below Fair Value: RWT is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: RWT is poor value based on its PE Ratio (13.6x) compared to the Mortgage REITs industry average (12.9x).

PE vs Market: RWT is good value based on its PE Ratio (13.6x) compared to the US market (17.1x).


Price to Earnings Growth Ratio

PEG Ratio: RWT is poor value based on its PEG Ratio (1x)


Price to Book Ratio

PB vs Industry: RWT is overvalued based on its PB Ratio (1.1x) compared to the US Mortgage REITs industry average (1x).


Next Steps

Future Growth

How is Redwood Trust forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

13.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: RWT's forecast earnings growth (13.5% per year) is above the savings rate (1.7%).

Earnings vs Market: RWT's earnings (13.5% per year) are forecast to grow faster than the US market (13.2% per year).

High Growth Earnings: RWT's earnings are forecast to grow, but not significantly.

Revenue vs Market: RWT's revenue (13.2% per year) is forecast to grow faster than the US market (7.6% per year).

High Growth Revenue: RWT's revenue (13.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: RWT's Return on Equity is forecast to be low in 3 years time (11.9%).


Next Steps

Past Performance

How has Redwood Trust performed over the past 5 years?

6.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: RWT has high quality earnings.

Growing Profit Margin: RWT's current net profit margins (47.2%) are lower than last year (61.1%).


Past Earnings Growth Analysis

Earnings Trend: RWT's earnings have grown by 6.4% per year over the past 5 years.

Accelerating Growth: RWT's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: RWT had negative earnings growth (-21.1%) over the past year, making it difficult to compare to the Mortgage REITs industry average (11.8%).


Return on Equity

High ROE: RWT's Return on Equity (6.7%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Redwood Trust's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: RWT has a low level of unsold assets or inventory.

Debt Coverage by Assets: RWT's debt is covered by short term assets (assets are 1.1x debt).


Financial Institutions Analysis

Asset Level: RWT's level of assets compared to its equity is low.

Allowance for Bad Loans: Insufficient data to determine if RWT has a sufficient allowance for bad loans.

Low Risk Liabilities: RWT reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if RWT has an acceptable proportion of non-loan assets held.

Low Risk Deposits: RWT has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if RWT has an appropriate level of bad loans.


Next Steps

Dividend

What is Redwood Trust's current dividend yield, its reliability and sustainability?

7.16%

Current Dividend Yield


Dividend Yield vs Market

company7.2%marketbottom25%1.5%markettop25%4.0%industryaverage9.8%forecastin3Years7.4%

Current dividend yield vs market & industry

Notable Dividend: RWT's dividend (7.16%) is higher than the bottom 25% of dividend payers in the US market (1.53%).

High Dividend: RWT's dividend (7.16%) is in the top 25% of dividend payers in the US market (3.96%)


Stability and Growth of Payments

Stable Dividend: RWT's dividends per share have been stable in the past 10 years.

Growing Dividend: RWT's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (97.1%), RWT's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: RWT's dividends in 3 years are forecast to be covered by earnings (71.8% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.1yrs

Average management tenure


CEO

Chris Abate (39yo)

1.8yrs

Tenure

US$4,950,574

Compensation

Mr. Christopher J. Abate, also known as Chris, has been the Chief Executive Officer of Redwood Trust, Inc. from May 22, 2018 and serves as its Director since December 2017. Mr. Abate has been employed with ...


CEO Compensation Analysis

Compensation vs Market: Chris's total compensation ($USD4.95M) is about average for companies of similar size in the US market ($USD3.92M).

Compensation vs Earnings: Chris's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Christopher Abate
CEO & Director1.8yrsUS$4.95m0.13% $2.4m
Dashiell Robinson
President1.8yrsUS$3.60m0.026% $486.0k
Collin Cochrane
Chief Financial Officer2.4yrsUS$1.58m0.015% $290.1k
Andrew Stone
Executive VP11.2yrsUS$1.89m0.075% $1.4m
Garnet Kanouse
MD & Head of Residential0yrsUS$2.14m0.030% $568.5k
Martin Hughes
1.8yrsUS$978.85k0.61% $11.5m
Shoshone Stern
Chief Investment Officer3.4yrsUS$2.25m0.036% $686.0k
J. Richardson
Chief Technology Officer5.7yrsno datano data
Lisa Hartman
Senior VP & Head of Investor Relations0yrsno datano data
Sasha Macomber
MD & Chief Human Resource Officer1.8yrsno datano data

2.1yrs

Average Tenure

44yo

Average Age

Experienced Management: RWT's management team is considered experienced (2.1 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Christopher Abate
CEO & Director1.8yrsUS$4.95m0.13% $2.4m
Mariann Byerwalter
Independent Director22.1yrsUS$197.04k0.011% $200.6k
Douglas Hansen
Independent Vice Chairman of the Board7.4yrsUS$191.04k0.31% $5.8m
Greg Kubicek
Independent Director18.1yrsUS$219.04k0.096% $1.8m
Richard Baum
Independent Chairman of the Board7.4yrsUS$267.29k0.037% $697.5k
Georganne Proctor
Independent Director13.9yrsUS$222.04k0.0077% $144.9k
Debora Horvath
Independent Director3.9yrsUS$203.04k0.012% $223.6k
Jeffrey Pero
Independent Director10.3yrsUS$222.04k0.060% $1.1m
Fred Matera
Director0.9yrsUS$1.44m0.011% $214.4k

7.4yrs

Average Tenure

62yo

Average Age

Experienced Board: RWT's board of directors are considered experienced (7.4 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 21.6%.


Top Shareholders

Company Information

Redwood Trust, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Redwood Trust, Inc.
  • Ticker: RWT
  • Exchange: NYSE
  • Founded: 1994
  • Industry: Mortgage REITs
  • Sector: Diversified Financials
  • Market Cap: US$1.889b
  • Shares outstanding: 112.69m
  • Website: https://www.redwoodtrust.com

Number of Employees


Location

  • Redwood Trust, Inc.
  • One Belvedere Place
  • Suite 300
  • Mill Valley
  • California
  • 94941
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
RWTNYSE (New York Stock Exchange)YesCommon SharesUSUSDAug 1995
R2VDB (Deutsche Boerse AG)YesCommon SharesDEEURAug 1995

Biography

Redwood Trust, Inc., together with its subsidiaries, operates as a specialty finance company in the United States. The company operates through two segments, Investment Portfolio and Residential Mortgage Banking. The Investment Portfolio segment offers a portfolio of investments in residential mortgage-backed securities retained from Sequoia securitizations, as well as issued by third parties and other credit risk-related investments; and invests directly in residential mortgage loans. The Residential Mortgage Banking segment operates a mortgage loan conduit, which acquires residential loans from third-party originators for sale, securitization, or transfer to investment portfolio. This segment also includes derivative financial instruments to manage risks associated with residential loans. The company qualifies as a real estate investment trust (REIT) for federal income tax purposes. As a REIT, it intends to distribute at least 90% of its taxable income as dividends to shareholders. Redwood Trust, Inc. was founded in 1994 and is headquartered in Mill Valley, California. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/27 00:34
End of Day Share Price2020/02/26 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.