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RWT

Redwood Trust NYSE:RWT Stock Report

Last Price

US$6.09

Market Cap

US$711.1m

7D

-1.5%

1Y

-53.9%

Updated

05 Oct, 2022

Data

Company Financials +
RWT fundamental analysis
Snowflake Score
Valuation3/6
Future Growth3/6
Past Performance0/6
Financial Health2/6
Dividends2/6

RWT Stock Overview

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

Redwood Trust Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Redwood Trust
Historical stock prices
Current Share PriceUS$6.09
52 Week HighUS$14.17
52 Week LowUS$5.52
Beta1.12
1 Month Change-17.03%
3 Month Change-23.40%
1 Year Change-53.90%
3 Year Change-63.09%
5 Year Change-63.36%
Change since IPO-64.44%

Recent News & Updates

Sep 13

Redwood Trust declares $0.23 dividend

Redwood Trust (NYSE:RWT) declares $0.23/share quarterly dividend, in line with previous. Forward yield 12.99% Payable Sept. 30; for shareholders of record Sept. 23; ex-div Sept. 22. See RWT Dividend Scorecard, Yield Chart, & Dividend Growth.

Aug 31

Redwood Trust downgraded to Neutral at BTIG on interest rate uncertainty

BTIG analyst Eric Hagen downgraded Redwood Trust (NYSE:RWT) to Neutral on Wednesday, in line with his ratings on most non-Agency mortgage REITs, due to uncertainty surrounding interest rates and mortgage spreads. Still, "we continue to like many of the key fundamentals supporting the single-family rental and transitional loan space," Hagen wrote in a note to clients. "On a relative basis we see somewhat stronger earnings visibility and less valuation sensitivity in some Agency REITs and mortgage orginator/servicers." More hawkish Federal Reserve policy and the yield curve inversion has dragged on the stock for much of this year, the analyst said. And "visibility appears particularly low right now for investors to capture very much capital appreciation or valuation improvement as a result of tighter spreads." He doesn't expect Redwood Trust (RWT) stock to fall to below $7 as it did in mid-June. BTIG doesn't provide price targets for Neutral-rated stocks. Hagen's Neutral rating broke from the average Wall Street rating of Buy The company announced a $125M stock buyback program in July. Take a look at Redwood's (RWT) dividend history here.

Shareholder Returns

RWTUS Mortgage REITsUS Market
7D-1.5%-5.6%1.9%
1Y-53.9%-40.3%-18.8%

Return vs Industry: RWT underperformed the US Mortgage REITs industry which returned -37.5% over the past year.

Return vs Market: RWT underperformed the US Market which returned -18.2% over the past year.

Price Volatility

Is RWT's price volatile compared to industry and market?
RWT volatility
RWT Average Weekly Movement6.7%
Mortgage REITs Industry Average Movement5.8%
Market Average Movement7.0%
10% most volatile stocks in US Market15.5%
10% least volatile stocks in US Market2.9%

Stable Share Price: RWT is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: RWT's weekly volatility (7%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
1994298Chris Abatehttps://www.redwoodtrust.com

Redwood Trust, Inc., together with its subsidiaries, operates as a specialty finance company in the United States. The company operates through three segments: Residential Mortgage Banking, Business Purpose Mortgage Banking, and Investment Portfolio. The Residential Mortgage Banking segment operates a mortgage loan conduit that acquires residential loans from third-party originators for subsequent sale, securitization, or transfer to its investment portfolio.

Redwood Trust Fundamentals Summary

How do Redwood Trust's earnings and revenue compare to its market cap?
RWT fundamental statistics
Market CapUS$711.10m
Earnings (TTM)US$56.82m
Revenue (TTM)US$241.48m

12.5x

P/E Ratio

2.9x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
RWT income statement (TTM)
RevenueUS$241.48m
Cost of RevenueUS$16.97m
Gross ProfitUS$224.51m
Other ExpensesUS$167.69m
EarningsUS$56.82m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)0.49
Gross Margin92.97%
Net Profit Margin23.53%
Debt/Equity Ratio987.7%

How did RWT perform over the long term?

See historical performance and comparison

Dividends

15.1%

Current Dividend Yield

185%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is RWT undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for RWT?

Other financial metrics that can be useful for relative valuation.

RWT key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenuen/a
Enterprise Value/EBITDAn/a
PEG Ratio0.1x

Price to Earnings Ratio vs Peers

How does RWT's PE Ratio compare to its peers?

RWT PE Ratio vs Peers
The above table shows the PE ratio for RWT vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average9.1x
BRMK Broadmark Realty Capital
9.2x14.5%US$713.5m
RC Ready Capital
5.9x1.0%US$1.2b
ACRE Ares Commercial Real Estate
11.1x16.3%US$590.9m
KREF KKR Real Estate Finance Trust
10.3x4.7%US$1.2b
RWT Redwood Trust
12.5x106.4%US$711.1m

Price-To-Earnings vs Peers: RWT is expensive based on its Price-To-Earnings Ratio (12.5x) compared to the peer average (9.1x).


Price to Earnings Ratio vs Industry

How does RWT's PE Ratio compare vs other companies in the US Mortgage REITs Industry?

Price-To-Earnings vs Industry: RWT is expensive based on its Price-To-Earnings Ratio (12.5x) compared to the US Mortgage REITs industry average (10.6x)


Price to Earnings Ratio vs Fair Ratio

What is RWT's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

RWT PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio12.5x
Fair PE Ratio55.9x

Price-To-Earnings vs Fair Ratio: RWT is good value based on its Price-To-Earnings Ratio (12.5x) compared to the estimated Fair Price-To-Earnings Ratio (55.9x).


Share Price vs Fair Value

What is the Fair Price of RWT when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: RWT ($6.09) is trading below our estimate of fair value ($8.8)

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


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.


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Future Growth

How is Redwood Trust forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

Future Growth Score

3/6

Future Growth Score 3/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


106.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: RWT's forecast earnings growth (106.4% per year) is above the savings rate (1.9%).

Earnings vs Market: RWT's earnings (106.4% per year) are forecast to grow faster than the US market (14.8% per year).

High Growth Earnings: RWT's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: RWT's revenue is expected to decline over the next 3 years (-4.7% per year).

High Growth Revenue: RWT's revenue is forecast to decline over the next 3 years (-4.7% 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 (11.8%).


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Past Performance

How has Redwood Trust performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


-3.5%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: RWT has a high level of non-cash earnings.

Growing Profit Margin: RWT's current net profit margins (23.5%) are lower than last year (59.3%).


Past Earnings Growth Analysis

Earnings Trend: RWT's earnings have declined by 3.5% 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 (-84.7%) over the past year, making it difficult to compare to the Mortgage REITs industry average (-1.6%).


Return on Equity

High ROE: RWT's Return on Equity (5%) is considered low.


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Financial Health

How is Redwood Trust's financial position?

Financial Health Score

2/6

Financial Health Score 2/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: RWT's short term assets ($12.9B) exceed its short term liabilities ($2.0B).

Long Term Liabilities: RWT's short term assets ($12.9B) exceed its long term liabilities ($10.6B).


Debt to Equity History and Analysis

Debt Level: RWT's net debt to equity ratio (944.7%) is considered high.

Reducing Debt: RWT's debt to equity ratio has increased from 372.8% to 987.7% over the past 5 years.

Debt Coverage: RWT's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: Insufficient data to determine if RWT's interest payments on its debt are well covered by EBIT.


Balance Sheet


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Dividend

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

Dividend Score

2/6

Dividend Score 2/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


15.11%

Current Dividend Yield

Dividend Yield vs Market

Redwood Trust Dividend Yield vs Market
How does Redwood Trust dividend yield compare to the market?
SegmentDividend Yield
Company (Redwood Trust)15.1%
Market Bottom 25% (US)1.6%
Market Top 25% (US)4.5%
Industry Average (Mortgage REITs)14.4%
Analyst forecast in 3 Years (Redwood Trust)15.2%

Notable Dividend: RWT's dividend (15.11%) is higher than the bottom 25% of dividend payers in the US market (1.6%).

High Dividend: RWT's dividend (15.11%) is in the top 25% of dividend payers in the US market (4.53%)


Stability and Growth of Payments

Stable Dividend: RWT's dividend payments have been volatile in the past 10 years.

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


Earnings Payout to Shareholders

Earnings Coverage: With its high payout ratio (185.2%), RWT's dividend payments are not well covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: RWT is paying a dividend but the company has no free cash flows.


Discover strong dividend paying companies

Management

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

4.5yrs

Average management tenure


CEO

Chris Abate (42 yo)

4.83yrs

Tenure

US$13,598,971

Compensation

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


CEO Compensation Analysis

Chris Abate's Compensation vs Redwood Trust Earnings
How has Chris Abate's remuneration changed compared to Redwood Trust's earnings?
DateTotal Comp.SalaryCompany Earnings
Jun 30 2022n/an/a

US$57m

Mar 31 2022n/an/a

US$245m

Dec 31 2021US$14mUS$800k

US$309m

Sep 30 2021n/an/a

US$320m

Jun 30 2021n/an/a

US$372m

Mar 31 2021n/an/a

US$450m

Dec 31 2020US$6mUS$767k

-US$584m

Sep 30 2020n/an/a

-US$590m

Jun 30 2020n/an/a

-US$694m

Mar 31 2020n/an/a

-US$828m

Dec 31 2019US$7mUS$750k

US$164m

Sep 30 2019n/an/a

US$116m

Jun 30 2019n/an/a

US$122m

Mar 31 2019n/an/a

US$123m

Dec 31 2018US$5mUS$646k

US$116m

Sep 30 2018n/an/a

US$147m

Jun 30 2018n/an/a

US$142m

Mar 31 2018n/an/a

US$146m

Dec 31 2017US$4mUS$550k

US$137m

Sep 30 2017n/an/a

US$131m

Jun 30 2017n/an/a

US$147m

Mar 31 2017n/an/a

US$152m

Dec 31 2016US$4mUS$513k

US$128m

Sep 30 2016n/an/a

US$143m

Jun 30 2016n/an/a

US$111m

Mar 31 2016n/an/a

US$97m

Dec 31 2015US$2mUS$425k

US$99m

Compensation vs Market: Chris's total compensation ($USD13.60M) is above average for companies of similar size in the US market ($USD3.98M).

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

Experienced Management: RWT's management team is considered experienced (4.5 years average tenure).


Board Members

Experienced Board: RWT's board of directors are considered experienced (4.8 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.


Recent Insider Transactions

NYSE:RWT Recent Insider Transactions by Companies or Individuals
DateValueNameEntityRoleSharesMax Price
05 Nov 21BuyUS$12,899Sasha MacomberIndividual933US$13.83

Ownership Breakdown

What is the ownership structure of RWT?
Owner TypeNumber of SharesOwnership Percentage
Individual Insiders1,202,4451.0%
General Public21,585,80218.5%
Institutions93,977,54280.5%

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 3.3%.


Top Shareholders

Top 25 shareholders own 64.57% of the company
OwnershipNameSharesCurrent ValueChange %Portfolio %
17.87%
BlackRock, Inc.
20,869,574$127.1m2.22%no data
11.02%
The Vanguard Group, Inc.
12,868,373$78.4m5.08%no data
7.97%
FMR LLC
9,304,912$56.7m0%no data
3.67%
State Street Global Advisors, Inc.
4,279,532$26.1m3.62%no data
2.19%
Capital Research and Management Company
2,562,000$15.6m0%no data
2.16%
LSV Asset Management
2,527,653$15.4m4.24%0.03%
1.77%
Geode Capital Management, LLC
2,064,357$12.6m3.92%no data
1.47%
Adage Capital Management, L.P.
1,719,678$10.5m38.02%0.02%
1.34%
ClearBridge Investments, LLC
1,561,311$9.5m0%0.01%
1.16%
Charles Schwab Investment Management, Inc.
1,358,396$8.3m5.42%no data
1.15%
BNY Mellon Asset Management
1,338,168$8.1m-1.02%no data
1.14%
Invesco Capital Management LLC
1,336,950$8.1m-27.1%0.01%
1.1%
Northern Trust Global Investments
1,289,577$7.9m1.23%no data
1.09%
Balyasny Asset Management L.P.
1,277,033$7.8m28.94%0.03%
1.02%
Peregrine Capital Management, LLC
1,192,656$7.3m10.44%0.19%
1.02%
Boothbay Fund Management, LLC
1,191,812$7.3m103.05%0.27%
0.97%
Norges Bank Investment Management
1,136,704$6.9m0%no data
0.95%
Wellington Management Group LLP
1,107,516$6.7m45.36%no data
0.93%
Angel Oak Capital Advisors, LLC
1,082,116$6.6m0%23.01%
0.83%
J.P. Morgan Asset Management, Inc.
968,727$5.9m-10.77%no data
0.8%
First Trust Advisors LP
930,463$5.7m207.24%0.01%
0.79%
Goldman Sachs Asset Management, L.P.
917,627$5.6m737.33%no data
0.77%
Evergreen Capital Management LLC
894,425$5.4m26.72%0.28%
0.74%
Morgan Stanley, Investment Banking and Brokerage Investments
858,448$5.2m-31.05%no data
0.65%
Raymond James Financial Inc., Asset Management Arm
762,498$4.6m21.8%no data

Company Information

Redwood Trust, Inc.'s 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
  • Implied Market Cap: US$711.104m
  • Shares outstanding: 116.77m
  • 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

Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/10/05 00:00
End of Day Share Price2022/10/05 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


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.