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Redwood
(NYSE:RWT)
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Rating:51Neutral
Price Target:
$4.50
â–¼(-25.00% Downside)
Action:Reiterated
Date:07/07/26
The score is held back primarily by weak financial performance—revenue decline, net losses, very high leverage, and deeply negative operating/free cash flow. The latest earnings call improves the outlook with strong operating momentum and accretive JV guidance, while technicals remain bearish (below key moving averages) despite oversold readings. Valuation is mixed: the dividend yield is attractive, but the negative P/E underscores profitability risk.
Positive Factors
Operating Scale & Volume Growth
Sustained record mortgage banking volumes indicate durable scale in origination and securitization. High capital turnover supports recurring fee and gain-on-sale revenue, spreads fixed overhead across more production, and underpins long-term margin resilience and platform economics even through cyclical housing activity.
Negative Factors
Very High Leverage
Extremely elevated debt-to-equity leaves the firm highly sensitive to spreads, mark-to-market volatility, and rising funding costs. High leverage limits strategic flexibility, amplifies downside in stressed markets, and increases refinancing and covenant risk, undermining durable capital stability over the coming quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Operating Scale & Volume Growth
Sustained record mortgage banking volumes indicate durable scale in origination and securitization. High capital turnover supports recurring fee and gain-on-sale revenue, spreads fixed overhead across more production, and underpins long-term margin resilience and platform economics even through cyclical housing activity.
Read all positive factors
Redwood Key Performance Indicators (KPIs)
Any
Net Interest Income by Segment
Data provided by:
The Fly
The FlyRedwood (RWT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$638.60M
Dividend Yield13.13%
Average Volume (3M)3.27M
Price to Earnings (P/E)―
Beta (1Y)0.88
Revenue Growth16.94%
EPS Growth-469.13%
CountryUS
Employees351
SectorReal Estate
Sector Strength53
IndustryREIT - Mortgage
Share Statistics
EPS (TTM)-0.78
Shares Outstanding125,215,740
10 Day Avg. Volume6,920,183
30 Day Avg. Volume3,269,829
Financial Highlights & Ratios
PEG Ratio0.03
Price to Book (P/B)0.73
Price to Sales (P/S)0.65
P/FCF Ratio-0.07
Enterprise Value/Market Cap40.28
Enterprise Value/Revenue22.83
Enterprise Value/Gross Profit107.17
Enterprise Value/Ebitda109.30
Forecast
1Y Price Target
$6.00Price Target Upside0.00%
Rating ConsensusStrong Buy
Number of Analyst Covering5
EPS Forecast (FY)1.03
Revenue Forecast (FY)$371.44M
Redwood Business Overview & Revenue Model
Company Description
Redwood Trust, Inc. is a specialized financial enterprise operating across the United States, managing its activities through three distinct divisions. Its Residential Mortgage Banking segment functions as a conduit, sourcing residential home loan...
How the Company Makes Money
Redwood makes money primarily through a combination of (1) net interest income from holding and financing residential mortgage-related assets and (2) fee and gain-on-sale revenues generated by its mortgage banking and securitization activities. Ne...
Redwood Earnings Call Summary
Earnings Call Date:Apr 29, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Jul 28, 2026
Earnings Call Sentiment Positive
The call conveyed strong operational momentum and capital efficiency gains—record mortgage banking volume, notable JV partnerships (including an ~$8 billion Castlelake commitment), Sequoia and Aspire platform growth, and improved capital and funding metrics. Offsetting these positives were a Q1 GAAP net loss, portfolio marks driven by March volatility and TBA/spread widening, and one-time restructuring and G&A items as legacy and CoreVest are repositioned. Management provided clear plans and targets to reduce legacy drag and expects material earnings accretion from announced JVs, indicating confidence in near- to medium-term improvement.Positive Updates
Record Operating Quarter and High Capital Turnover
Mortgage banking volume surpassed $8.5 billion (first time) representing a third consecutive record operating quarter; volume equaled ~10x reported GAAP book value, signaling very high capital turnover. Completed 11 securitizations in Q1 (another in-house record).
Negative Updates
GAAP Net Loss and Book Value Decline
Reported GAAP net loss of $7 million (loss of $0.07 per share) in Q1 versus GAAP net income of $18 million ($0.13 per share) in Q4. Book value per share was $7.12 at March 31, down ~3% Q/Q, driven by noncash market-related valuation changes and certain nonrecurring expenses.
Read all updates
Q1-2026 Updates
Positive
Negative
Record Operating Quarter and High Capital Turnover
Mortgage banking volume surpassed $8.5 billion (first time) representing a third consecutive record operating quarter; volume equaled ~10x reported GAAP book value, signaling very high capital turnover. Completed 11 securitizations in Q1 (another in-house record).
Read all positive updates
Company Guidance
Management guided that the newly announced Castlelake JV should be accretive, with potential incremental annual earnings of roughly $0.12–$0.15 per share and the ability to support about a 30% incremental volume lift for Sequoia (ramped roughly linearly over the next four quarters); an Aspire JV is expected to support ~25–30% of Aspire’s annualized production. Longer‑term targets remain a ≥20% market share for core products and margin resilience (Sequoia Q1 gain‑on‑sale 96 bps; Sequoia cost per loan ~18 bps), while they expect continued operational leverage as mortgage banking consolidated EAD was $27M ($0.21/sh) and core EAD $37M ($0.28/sh, 19% ROE) with mortgage platforms generating $37M GAAP net income (~38% annualized ROC). They plan to reduce legacy capital from 15% of total capital (≈$240M) to below 10% by year‑end and toward <5% thereafter (each ~$50M redeployed ≈ +$0.05 quarterly EAD), and highlighted strong liquidity and financing optionality (unrestricted cash $202M, excess warehouse capacity ~$3.9B, total warehouse capacity up 30% to $7.1B, recourse debt $4.7B, ~11 securitizations/Q1 ≈ $5.2B collateral, ~50 bps improvement in cost of funds Y/Y) plus ongoing efficiency gains (2,500 agentic workflows, ~6,000 hours/year freed).Redwood Financial Statement Overview
Summary
Income Statement
38
Negative
Balance Sheet
22
Negative
Cash Flow
12
Very Negative
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.13B | 1.11B | 242.50M | 158.60M | -22.10M | 539.60M |
| Gross Profit | 240.04M | 1.06B | 208.91M | 136.86M | -41.82M | 517.62M |
| EBITDA | 235.36M | 1.07B | 11.92M | 14.85M | 398.85M | 800.74M |
| Net Income | -91.68M | -70.03M | 54.00M | -2.27M | -163.52M | 319.61M |
Balance Sheet | ||||||
| Total Assets | 26.82B | 23.70B | 18.26B | 14.50B | 13.03B | 14.71B |
| Cash, Cash Equivalents and Short-Term Investments | 678.80M | 678.68M | 456.64M | 380.48M | 391.04M | 657.28M |
| Total Debt | 25.29B | 22.16B | 16.39B | 12.84B | 11.50B | 12.88B |
| Total Liabilities | 25.86B | 22.72B | 17.07B | 13.30B | 11.95B | 13.32B |
| Stockholders Equity | 957.00M | 982.62M | 1.19B | 1.20B | 1.08B | 1.39B |
Cash Flow | ||||||
| Free Cash Flow | -12.65B | -10.09B | -5.86B | -2.02B | -139.14M | -5.69B |
| Operating Cash Flow | -12.65B | -10.09B | -5.86B | -2.02B | -139.14M | -5.69B |
| Investing Cash Flow | 5.10B | 4.53B | 2.54B | 908.72M | 213.89M | 1.40B |
| Financing Cash Flow | 7.50B | 5.70B | 3.27B | 1.15B | -276.87M | 4.28B |
Redwood Technical Analysis
Positive
6.00
Price Trends
5.04
Positive
5.30
Negative
5.20
Negative
Market Momentum
-0.06
Negative
58.03
Neutral
86.76
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RWT, the sentiment is Positive. The current price of 6 is above the 20-day moving average (MA) of 4.85, above the 50-day MA of 5.04, and above the 200-day MA of 5.20, indicating a neutral trend. The MACD of -0.06 indicates Negative momentum. The RSI at 58.03 is Neutral, neither overbought nor oversold. The STOCH value of 86.76 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RWT.
Redwood Risk Analysis
Redwood disclosed 55 risk factors in its most recent earnings report. Redwood reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Redwood Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% | |
62 Neutral | $658.67M | 13.19 | 6.09% | 10.48% | 0.84% | -8.55% | |
59 Neutral | $621.86M | 15.37 | 4.95% | 13.31% | 5.47% | -22.89% | |
56 Neutral | $965.16M | 8.71 | 7.43% | 14.90% | 2.05% | -11.87% | |
51 Neutral | $638.60M | -6.60 | -9.19% | 13.13% | 16.94% | -469.13% | |
50 Neutral | $476.16M | -3.94 | -8.30% | 11.33% | -20.03% | -1249.19% | |
47 Neutral | $272.61M | -0.53 | -31.38% | 26.82% | -56.96% | -78.75% |
* Real Estate Sector Average
RWT
Redwood
5.10
-0.15
-2.88%
MFA
MFA Financial
9.50
1.51
18.90%
RC
Ready Capital
1.65
-2.50
-60.20%
KREF
Kkr Real Estate Finance
7.36
-0.90
-10.85%
TRTX
Tpg Re Finance
8.52
1.21
16.49%
FBRT
Franklin BSP Realty Trust
8.08
-1.68
-17.19%
Redwood Corporate Events
Business Operations and StrategyFinancial DisclosuresPrivate Placements and FinancingProduct-Related Announcements
Redwood Trust Highlights Growth and AI Mortgage Advances
Positive
Jul 7, 2026
On July 7, 2026, Redwood Trust reported continued momentum in its mortgage banking operations for the quarter ended June 30, 2026, with aggregate volumes exceeding $8 billion amid volatile rates and a subdued housing market. Its Aspire non-QM busi...
Business Operations and StrategyDividends
Redwood Trust Declares Stable Second-Quarter 2026 Dividends
Positive
Jun 11, 2026
On June 11, 2026, Redwood Trust, Inc., a specialty finance REIT focused on housing credit, said its board declared second-quarter 2026 dividends on both common and preferred shares, underscoring its role in supplying liquidity to underserved segme...
Business Operations and StrategyPrivate Placements and Financing
Redwood Trust Completes $125 Million Senior Notes Offering
Positive
May 27, 2026
On May 27, 2026, Redwood Trust, Inc. completed a registered underwritten public offering of $125 million of 9.75% senior unsecured notes due June 1, 2031, generating approximately $120.41 million in net proceeds, with underwriters holding a 30-day...
Private Placements and FinancingRegulatory Filings and Compliance
Redwood Trust Announces New Senior Notes Offering
Neutral
May 20, 2026
On May 19, 2026, Redwood Trust, Inc. entered into an underwriting agreement with a syndicate of major investment banks to issue $125 million of 9.75% senior notes due 2031, with a 30-day option for the underwriters to buy up to an additional $18.7...
Executive/Board ChangesShareholder Meetings
Redwood Shareholders Reelect Board and Approve Incentive Plan
Positive
May 19, 2026
At its May 19, 2026 annual meeting, Redwood stockholders re-elected eight directors, including CEO Christopher J. Abate, to serve on the board through the 2027 annual meeting, reinforcing continuity in the company’s leadership and governance...
Business Operations and StrategyFinancial Disclosures
Redwood Trust Posts Q1 Loss Amid Strong Mortgage Production
Negative
Apr 29, 2026
On April 29, 2026, Redwood Trust reported first-quarter 2026 results showing a GAAP net loss of $7.3 million, or $0.07 per share, and a decline in GAAP book value per common share to $7.12 from $7.36 at year-end 2025. Despite the loss, non-GAAP Ea...
Business Operations and Strategy
Redwood Forms Jumbo Mortgage Joint Venture with Castlelake
Positive
Apr 29, 2026
On April 29, 2026, Redwood Trust and global alternative investment manager Castlelake announced a strategic joint venture centered on Redwood’s Sequoia platform to purchase up to $8 billion of fully documented prime jumbo mortgage loans. Und...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.