Redwood (RWT) AI Stock Analysis

• Market Cap: $790.85M
• Dividend Yield: 11.56%
• Average Volume (3M): 1.15M
• Price to Earnings (P/E): 28.3
• Beta (1Y): 0.95
• Revenue Growth: 31.71%
• EPS Growth: -499.14%
• Country: US
• Employees: 283
• Sector: Real Estate
• Sector Strength: 49
• Industry: REIT - Mortgage
• EPS (TTM): -0.76
• Shares Outstanding: 129,223,460
• 10 Day Avg. Volume: 874,181
• 30 Day Avg. Volume: 1,151,824
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 25.48
• Enterprise Value/Revenue: 83.30
• Enterprise Value/Gross Profit: 98.73
• Enterprise Value/Ebitda: 20.53
• 1Y Price Target: $6.55
• Price Target Upside: 6.68% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

• Rating: 46 Neutral
• Price Target: $5.50 ▼(-10.42% Downside)

RWT's overall score reflects significant financial challenges, including high leverage and negative cash flows, which are the most critical concerns. Technical analysis and valuation provide some balance, with a high dividend yield and oversold indicators. Strategic initiatives discussed in the earnings call and corporate events suggest potential long-term improvements, but immediate financial instability remains a major risk.

Positive Factors

Investment Flows

RWT is seeing strong jumbo residential mortgage investment flows, benefiting as small-to-medium sized banks are less interested in keeping mortgages on balance sheet.

Market Conditions

Conditions are relatively supportive for financing jumbo loans in the securitization market at mid-to-high teens returns.

Negative Factors

Earnings Performance

Earnings available for distribution were $0.13 versus $0.18 last quarter.

Financial Results

Fourth-quarter 2024 results were marked by below-consensus and sequentially lower earnings available for distribution and a decline in book value.

Redwood Business Overview & Revenue Model

Company Description

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. This segment also offers derivative financial instruments to manage risks associated with residential loans. The Business Purpose Mortgage Banking segment operates a platform that originates and acquires business purpose loans, such as single-family rental and bridge loans for subsequent securitization, sale, or transfer into its investment portfolio. The Investment Portfolio segment invests in securities retained from residential and business purpose securitization activities, and residential and small-balance multifamily bridge loans, as well as residential mortgage-backed securities issued by third parties, Freddie Mac K-Series multifamily loan securitizations and reperforming loan securitizations, servicer advance investments, home equity investments, and other housing-related investments. 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 incorporated in 1994 and is headquartered in Mill Valley, California.

How the Company Makes Money

Redwood Trust, Inc. makes money primarily through the acquisition and management of residential and commercial real estate loans and securities. The company generates revenue from interest income on its portfolio of loans and mortgage-backed securities. Additionally, Redwood Trust earns money through the sale and securitization of mortgage loans, where it packages and sells loans to investors, generating fees and income. The company also benefits from strategic partnerships with financial institutions and other investors to enhance its investment opportunities and revenue streams.

Redwood Financial Statement Overview

Summary

Redwood's financials are challenged by high leverage and negative cash flows. Despite strong gross margins, declining net income and significant debt, coupled with negative operating cash flow, indicate financial instability.

Income Statement

The income statement shows some volatility in revenue and profits. The TTM report indicates a slight decrease in total revenue, with a net profit margin of 16.5% compared to the previous year, which had a net income margin of 22.3%. Historical data reveals fluctuating revenue and profit margins, with a notable revenue growth between 2022 and 2023 but a decline in 2025. The gross profit margin remains high at 84.4%, indicating strong control over cost of sales. However, the declining net income from $54 million to $39.9 million in the TTM suggests challenges in maintaining profitability.

Balance Sheet

The balance sheet reflects a high debt-to-equity ratio of 15.1, indicating significant leverage, which is common in the REIT industry but poses risk if not managed well. The equity ratio has slightly improved over time, moving from 10.7% in 2020 to 5.9% in the latest period, suggesting some stabilization. However, the high level of liabilities relative to equity could stress financial flexibility. Return on equity dropped from 23% in 2021 to 3.4% in the TTM, reflecting reduced efficiency in generating profits from shareholders' equity.

Cash Flow

The cash flow statement highlights concerns with consistently negative operating cash flow, which was -$6.86 billion in the TTM, indicating cash burn from operations. This is partially offset by positive investing and financing cash flows. The free cash flow remains negative, highlighting potential liquidity issues. The operating cash flow to net income ratio is negative, suggesting that reported earnings are not translating into cash, which could be problematic for ongoing operations and sustainability.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	241.90M	998.79M	158.60M	-22.10M	539.60M	-318.03M
Gross Profit	204.08M	208.91M	136.86M	-41.82M	517.62M	-330.76M
EBITDA	981.25M	927.31M	0.00	398.85M	800.74M	-30.75M
Net Income	39.89M	54.00M	-2.27M	-163.52M	319.61M	-581.85M
Balance Sheet
Total Assets	19.87B	18.26B	14.50B	13.03B	14.71B	10.36B
Cash, Cash Equivalents and Short-Term Investments	259.92M	456.64M	347.74M	388.05M	656.79M	679.46M
Total Debt	18.24B	16.77B	12.84B	11.50B	13.07B	8.85B
Total Liabilities	18.69B	17.07B	13.30B	11.95B	13.32B	9.24B
Stockholders Equity	1.18B	1.19B	1.20B	1.08B	1.39B	1.11B
Cash Flow
Free Cash Flow	-6.86B	-5.86B	-2.02B	-139.14M	-5.69B	-505.47M
Operating Cash Flow	-6.86B	-5.86B	-2.02B	-139.14M	-5.69B	-505.47M
Investing Cash Flow	2.85B	2.54B	908.72M	213.89M	1.40B	4.07B
Financing Cash Flow	4.02B	3.27B	1.15B	-276.87M	4.28B	-3.31B

Redwood Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 6.14
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 6.14 is above the 20-day moving average (MA) of 5.95, above the 50-day MA of 5.94, and above the 200-day MA of 5.92, indicating a bullish trend. The MACD of 0.06 indicates Negative momentum. The RSI at 57.43 is Neutral, neither overbought nor oversold. The STOCH value of 73.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RWT.

Redwood Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TRTX	67 Neutral	$734.82M	14.40	5.87%	10.22%	-12.51%	―
ADAM	63 Neutral	$642.13M	37.46		10.87%	35.74%	―
ORC	61 Neutral	$1.13B	35.75	0.87%	20.17%	67.17%	―
KREF	54 Neutral	$634.77M	56.21	-1.76%	10.47%	-20.88%	-420.89%
Sector *	53 Neutral	$1.23B	2.98	-5.63%	5.85%	-6.20%	-79.02%
RC	47 Neutral	$701.68M	―	-13.92%	17.73%	-34.48%	-373.29%
RWT	46 Neutral	$790.85M	28.34	-6.97%	11.56%	31.71%	-499.14%

Redwood Corporate Events

Redwood Announces Q2 2025 Financial Results

On July 30, 2025, Redwood Trust, Inc. announced its financial results for the second quarter of 2025, highlighting an accelerated transition to a scalable operating model and an increased share repurchase authorization to $150 million. The company is reallocating capital from legacy investments to high-performing platforms, aiming to unlock long-term earnings potential and enhance shareholder value, despite reporting a GAAP net loss of $100.2 million for the quarter.

The most recent analyst rating on (RWT) stock is a Buy with a $8.00 price target. To see the full list of analyst forecasts on Redwood stock, see the RWT Stock Forecast page.

Redwood Declares Q2 2025 Dividends for Shareholders

On June 12, 2025, Redwood Trust, Inc. announced that its Board of Directors declared second quarter 2025 dividends for both common and preferred stock. The common stock dividend remains at $0.18 per share, continuing the company’s long-standing tradition of quarterly dividends, while the Series A preferred stock dividend is set at $0.625 per share. These dividends reflect Redwood’s ongoing commitment to providing stable returns to its shareholders.

The most recent analyst rating on (RWT) stock is a Buy with a $8.00 price target. To see the full list of analyst forecasts on Redwood stock, see the RWT Stock Forecast page.

Redwood Trust Holds Annual Stockholders Meeting

On May 22, 2025, Redwood Trust, Inc. held its Annual Meeting of Stockholders, where three key items were voted upon. The stockholders elected nine directors to serve until the 2026 meeting, ratified the appointment of Grant Thornton LLP as the independent registered public accounting firm for 2025, and approved a non-binding advisory resolution on executive compensation.

The most recent analyst rating on (RWT) stock is a Hold with a $6.50 price target. To see the full list of analyst forecasts on Redwood stock, see the RWT Stock Forecast page.