Two Harbors (TWO)
NYSE:TWO
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Two Harbors
(NYSE:TWO)
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Rating:51Neutral
Price Target:
$11.50
â–²(5.12% Upside)
Action:ReiteratedDate:03/27/26
The score is held down primarily by weak financial performance signals—earnings volatility, sharply higher leverage, and inconsistent cash generation. Offsetting this are moderately positive technical momentum, a high dividend yield (despite loss-driven negative P/E), and supportive but not risk-free corporate developments around the agreed take-private transaction.
Positive Factors
Strategic merger and vertical integration
The CrossCountry acquisition creates an end-to-end mortgage platform combining TWO's MSR portfolio and RoundPoint servicing with CrossCountry's origination franchise. This vertical integration should boost customer retention, recurring servicing fee streams, lower acquisition costs and create structural scale advantages over multiple cycles.
Negative Factors
Elevated leverage
Leverage surged materially, increasing balance-sheet fragility. High debt amplifies sensitivity to spread and funding shifts, reduces capital flexibility for dividends or opportunistic buying, and raises refinancing risk. Over a multi-month horizon this elevates downside in stressed funding or spread-widening scenarios.
Read all positive and negative factors
Positive Factors
Negative Factors
Strategic merger and vertical integration
The CrossCountry acquisition creates an end-to-end mortgage platform combining TWO's MSR portfolio and RoundPoint servicing with CrossCountry's origination franchise. This vertical integration should boost customer retention, recurring servicing fee streams, lower acquisition costs and create structural scale advantages over multiple cycles.
Read all positive factors
Two Harbors (TWO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.15B
Dividend Yield14.29%
Average Volume (3M)4.73M
Price to Earnings (P/E)―
Beta (1Y)0.64
Revenue Growth22.48%
EPS Growth50.49%
CountryUS
Employees477
SectorReal Estate
Sector Strength53
IndustryREIT - Mortgage
Share Statistics
EPS (TTM)0.26
Shares Outstanding105,043,190
10 Day Avg. Volume4,451,804
30 Day Avg. Volume4,725,234
Financial Highlights & Ratios
PEG Ratio<0.01
Price to Book (P/B)0.61
Price to Sales (P/S)1.81
P/FCF Ratio12.30
Enterprise Value/Market Cap7.72
Enterprise Value/Revenue11.69
Enterprise Value/Gross Profit11.58
Enterprise Value/Ebitda194.84
Forecast
1Y Price Target
$12.17Price Target Upside11.24% Upside
Rating ConsensusHold
Number of Analyst Covering8
EPS Forecast (FY)1.16
Revenue Forecast (FY)$20.67M
Two Harbors Business Overview & Revenue Model
Company Description
Two Harbors Investment Corp. operates as a real estate investment trust (REIT) that focuses on investing in, financing, and managing residential mortgage-backed securities (RMBS), non-agency securities, mortgage servicing rights, and other financi...
How the Company Makes Money
Two Harbors makes money primarily through net interest income generated by its investment portfolio. It purchases mortgage-related assets (most notably agency MBS) that pay interest and principal cash flows, and finances a portion of those holding...
Two Harbors Earnings Call Summary
Earnings Call Date:Feb 02, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 04, 2026
Earnings Call Sentiment Neutral
The call presented a balanced view: near-term and tactical performance highlights (Q4 economic return +3.9%, book value uptick, strong Q4 RMBS performance, record DTC funding and improved liquidity including repayment of convertible notes) and a transformational strategic benefit from the announced merger with UWM (doubling MSR scale). Offsetting these positives were material challenges including a full-year 2025 economic return of -12.6 before an adjustment for a litigation charge, active MSR sales that reduced owned servicing, reduced net interest/servicing income and mark-to-market headwinds, tighter RMBS spreads that materially lower upside to book value and modestly higher prepayment and spread sensitivity. Management’s tone was constructive about the merger and defensive on portfolio positioning, but uncertainty around spreads, volatility, and near-term dividend decisions tempers the overall outlook.Positive Updates
Strategic Merger with UWM and MSR Scale Expansion
Announced merger with United Wholesale Mortgage (UWM); pro forma MSR portfolio doubles to $400 billion, expected to provide scale for origination, enhanced servicing capabilities (Roundpoint), and strategic alignment to drive growth and shareholder upside.
Negative Updates
Full-Year 2025 Negative Economic Return (Pre-Adjustment)
Reported total economic return on book value for full-year 2025 of negative 12.6%; company notes an $3.50 per share previously recorded litigation settlement expense — excluding that item, full-year return would be positive 12.1%.
Read all updates
Q4-2025 Updates
Positive
Negative
Strategic Merger with UWM and MSR Scale Expansion
Announced merger with United Wholesale Mortgage (UWM); pro forma MSR portfolio doubles to $400 billion, expected to provide scale for origination, enhanced servicing capabilities (Roundpoint), and strategic alignment to drive growth and shareholder upside.
Read all positive updates
Company Guidance
Management's guidance quantified their forward-looking return and portfolio targets: they plan to allocate ~65% of capital to servicing (static return 10–13%) and the remainder to securities (static return 10–14%), implying a portfolio static return of 6.9%–10.2% before leverage and a prospective static return on common equity of 5.8%–11.1% (quarterly static return per share $0.16–$0.31); Q4 book value was $11.13 (vs. $11.04), Q4 economic return +3.9%, full‑year 2025 economic return on book value -12.6% (or +12.1% excluding a $3.50/share litigation charge). Key MSR and balance‑sheet metrics cited include a pro‑forma MSR scale of $400B post‑merger, MSR price multiple 5.8×, 60+ day delinquencies <1%, MSR CPR 6.4% (up 0.4 ppt), specified‑pool CPR 8.6% (from 8.3%), settled ~$400M UPB from flow/recapture and sold $9.6B UPB servicing‑retained, third‑party subservicing $40B (from $30B) and owned servicing ~ $162B (from $176B); liquidity and funding metrics: cash >$800M, convertible notes repaid $261.9M (1/15/2026), repo spreads ~SOFR+23bps, weighted agency RMBS repo days‑to‑maturity 54 days, $1.6B bilateral MSR borrowings, $1.1B unused MSR financing capacity, $71.5M drawn on advances with $78.5M available; and portfolio/market sensitivities: total portfolio $13.2B ($9B settled, $4.2B TBAs), economic debt/equity ~7x, sensitivity to a 25bps spread tightening rose from 2.3% to 3.7%, current‑coupon nominal spreads tightened 30bps to 114bps vs. swaps and OAS vs. SOFR tightened 23bps to 45bps, with two‑year options on 10‑yr swap at 79bps.Two Harbors Financial Statement Overview
Summary
Income Statement
48
Neutral
Balance Sheet
34
Negative
Cash Flow
22
Negative
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 605.61M | 845.84M | 640.49M | 12.61M | -142.91M |
| Gross Profit | 592.88M | 884.29M | 566.36M | -81.51M | -229.16M |
| EBITDA | 45.52M | 952.56M | 559.83M | 582.85M | 280.59M |
| Net Income | -454.30M | 298.17M | -106.37M | 220.24M | 187.23M |
Balance Sheet | |||||
| Total Assets | 10.86B | 12.20B | 13.14B | 13.47B | 12.11B |
| Cash, Cash Equivalents and Short-Term Investments | 7.36B | 504.88M | 729.82M | 8.46B | 8.32B |
| Total Debt | 8.56B | 1.28B | 1.89B | 1.80B | 1.24B |
| Total Liabilities | 9.07B | 10.08B | 10.94B | 11.28B | 9.37B |
| Stockholders Equity | 1.79B | 2.12B | 2.20B | 2.18B | 2.74B |
Cash Flow | |||||
| Free Cash Flow | 88.92M | 86.88M | 30.87M | -6.41M | -318.64M |
| Operating Cash Flow | 88.92M | 201.00M | 343.51M | 623.40M | 423.51M |
| Investing Cash Flow | 911.61M | 895.28M | -195.78M | -2.75B | 6.31B |
| Financing Cash Flow | -756.22M | -1.07B | -479.40M | 1.17B | -7.30B |
Two Harbors Technical Analysis
Positive
10.94
Price Trends
10.61
Positive
10.40
Positive
9.77
Positive
Market Momentum
0.27
Negative
59.20
Neutral
28.75
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TWO, the sentiment is Positive. The current price of 10.94 is above the 20-day moving average (MA) of 10.14, above the 50-day MA of 10.61, and above the 200-day MA of 9.77, indicating a bullish trend. The MACD of 0.27 indicates Negative momentum. The RSI at 59.20 is Neutral, neither overbought nor oversold. The STOCH value of 28.75 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TWO.
Two Harbors Risk Analysis
Two Harbors disclosed 64 risk factors in its most recent earnings report. Two Harbors 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
Two Harbors Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $984.18M | 5.46 | 9.66% | 14.90% | 5.52% | -47.72% | |
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% | |
55 Neutral | $1.03B | 8.54 | 6.79% | 12.69% | -15.48% | -36.45% | |
55 Neutral | $1.35B | 2.89 | 15.05% | 20.03% | 72.30% | -54.02% | |
54 Neutral | $676.06M | 9.99 | 5.60% | 13.31% | -0.93% | -1.92% | |
53 Neutral | $1.08B | 4.43 | 8.85% | 11.40% | 9.46% | -111.44% | |
51 Neutral | $1.15B | -2.41 | -23.93% | 14.29% | 22.48% | 50.49% |
* Real Estate Sector Average
TWO
Two Harbors
10.94
1.42
14.92%
CIM
Chimera Investment
12.93
3.64
39.26%
MFA
MFA Financial
9.64
2.29
31.19%
PMT
PennyMac Mortgage
11.78
0.61
5.45%
ORC
Orchid Island Capital
7.06
2.01
39.77%
FBRT
Franklin BSP Realty Trust
8.35
-1.47
-14.99%
Two Harbors Corporate Events
Business Operations and StrategyDelistings and Listing ChangesM&A Transactions
Two Harbors to Be Acquired and Taken Private
Positive
Mar 27, 2026
On March 27, 2026, Two Harbors Investment Corp. agreed to be acquired by CrossCountry Intermediate Holdco, an affiliate of CrossCountry Mortgage, which will merge a subsidiary into Two Harbors and take it private as a wholly owned subsidiary. Two ...
Business Operations and StrategyM&A TransactionsShareholder Meetings
Two Harbors Faces Competing Takeover Bids, Meeting Delayed
Positive
Mar 23, 2026
On March 23, 2026, Two Harbors announced that an ad hoc committee of its board determined CrossCountry Mortgage’s unsolicited all-cash offer of $10.70 per share, including payment of a $25.4 million termination fee owed to UWM Holdings, cons...
Business Operations and StrategyM&A TransactionsShareholder Meetings
Two Harbors Evaluates Unsolicited All-Cash Acquisition Proposal
Positive
Mar 19, 2026
On March 19, 2026, Two Harbors Investment Corp. disclosed that its board received an unsolicited all-cash proposal to acquire all outstanding common shares for $10.70 a share, including coverage of a $25.4 million termination fee tied to its exist...
M&A TransactionsShareholder Meetings
Two Harbors Adjourns Special Meeting on UWM Acquisition
Neutral
Mar 16, 2026
On March 16, 2026, Two Harbors Investment Corp. adjourned its virtual special meeting of stockholders to March 24, 2026, to allow more time to gather votes and solicit additional proxies supporting its all-stock acquisition by UWM Holdings Corpora...
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.