Redwood Trust (RWT)
NYSE:RWT
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Redwood
(NYSE:RWT)
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Rating:45Neutral
Price Target:
$5.00
â–¼(-16.67% Downside)
Action:Reiterated
Date:05/20/26
The score is held down primarily by weak financial performance (declining revenue, net losses, very high leverage, and deeply negative cash flow). Technicals also reflect a bearish setup with price below key moving averages and negative momentum. These are partially offset by a very high dividend yield and a more positive earnings-call outlook driven by accretive JV guidance, improving funding metrics, and strong mortgage-banking operating momentum.
Positive Factors
Mortgage banking scale & high capital turnover
Record and growing mortgage banking volumes demonstrate durable platform scale and recurring fee/gain-on-sale revenue potential. High capital turnover (volume ~10x GAAP book value) implies efficient use of equity, supporting sustainable origination economics and operational leverage across cycles.
Negative Factors
Extremely high leverage
Debt-to-equity at multi-decade-elevated levels materially constrains financial flexibility and amplifies sensitivity to rate moves and spread volatility. For a mortgage REIT, this limits the firm's ability to absorb marks, fund organic growth, or respond to stress without costly refinancing or dilutive capital raises.
Read all positive and negative factors
Positive Factors
Negative Factors
Mortgage banking scale & high capital turnover
Record and growing mortgage banking volumes demonstrate durable platform scale and recurring fee/gain-on-sale revenue potential. High capital turnover (volume ~10x GAAP book value) implies efficient use of equity, supporting sustainable origination economics and operational leverage across cycles.
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
$662.39M
Dividend Yield13.13%
Average Volume (3M)1.25M
Price to Earnings (P/E)―
Beta (1Y)0.85
Revenue Growth16.94%
EPS Growth-469.13%
CountryUS
Employees283
SectorReal Estate
Sector Strength53
IndustryREIT - Mortgage
Share Statistics
EPS (TTM)-0.77
Shares Outstanding125,215,740
10 Day Avg. Volume1,016,921
30 Day Avg. Volume1,248,626
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 Cap38.87
Enterprise Value/Revenue30.54
Enterprise Value/Gross Profit95.36
Enterprise Value/Ebitda107.36
Forecast
1Y Price Target
$7.13Price Target Upside18.75% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering4
EPS Forecast (FY)0.7
Revenue Forecast (FY)$369.97M
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 Portfol...
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 23, 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 | 843.01M | 1.11B | 242.50M | 158.60M | -22.10M | 539.60M |
| Gross Profit | 269.97M | 1.06B | 208.91M | 136.86M | -41.82M | 517.62M |
| EBITDA | 239.80M | 1.07B | 0.00 | 0.00 | 398.85M | 800.74M |
| Net Income | -91.67M | -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 | 202.00M | 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
Negative
6.00
Price Trends
5.61
Negative
5.62
Negative
5.45
Negative
Market Momentum
-0.13
Positive
37.95
Neutral
20.49
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RWT, the sentiment is Negative. The current price of 6 is above the 20-day moving average (MA) of 5.49, above the 50-day MA of 5.61, and above the 200-day MA of 5.45, indicating a bearish trend. The MACD of -0.13 indicates Positive momentum. The RSI at 37.95 is Neutral, neither overbought nor oversold. The STOCH value of 20.49 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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% | |
64 Neutral | $640.89M | 8.07 | 6.09% | 10.48% | 0.84% | -8.55% | |
62 Neutral | $668.04M | 14.16 | 4.95% | 13.31% | 5.47% | -22.89% | |
56 Neutral | $966.18M | -252.36 | 7.43% | 14.90% | 2.05% | -11.87% | |
50 Neutral | $300.70M | -0.33 | -31.38% | 26.82% | -56.96% | -78.75% | |
50 Neutral | $412.76M | -1.76 | -8.30% | 11.33% | -20.03% | -1249.19% | |
45 Neutral | $662.39M | -31.82 | -9.19% | 13.13% | 16.94% | -469.13% |
* Real Estate Sector Average
RWT
Redwood
5.29
0.44
9.03%
MFA
MFA Financial
9.51
1.48
18.49%
RC
Ready Capital
1.82
-2.04
-52.83%
KREF
Kkr Real Estate Finance
6.38
-1.41
-18.10%
TRTX
Tpg Re Finance
8.29
1.56
23.18%
FBRT
Franklin BSP Realty Trust
8.68
-0.88
-9.18%
Redwood Corporate Events
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...
Dividends
Redwood Declares Consistent First-Quarter 2026 Dividends
Positive
Mar 12, 2026
Redwood Trust, Inc., a specialty housing finance REIT traded on the NYSE under ticker RWT, operates across multiple platforms to provide liquidity and customized housing credit investments to underserved segments of the U.S. mortgage and rental ma...
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.