Two Harbors (TWO) AI Stock Analysis

• Market Cap: $1.27B
• Dividend Yield: 14.29%
• Average Volume (3M): 3.12M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.73
• Revenue Growth: 22.48%
• EPS Growth: 50.49%
• Country: US
• Employees: 477
• Sector: Real Estate
• Sector Strength: 53
• Industry: REIT - Mortgage
• EPS (TTM): 0.36
• Shares Outstanding: 104,161,990
• 10 Day Avg. Volume: 2,549,388
• 30 Day Avg. Volume: 3,116,616
• PEG Ratio: -0.02
• Price to Book (P/B): 0.56
• Price to Sales (P/S): 2.35
• P/FCF Ratio: 13.79
• Enterprise Value/Market Cap: 7.20
• Enterprise Value/Revenue: 16.68
• Enterprise Value/Gross Profit: 32.61
• Enterprise Value/Ebitda: -955.84
• 1Y Price Target: $10.88
• Price Target Upside: -11.40% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 5
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 53 Neutral
• Price Target: $10.00 ▼(-18.57% Downside)

The score is held back primarily by weak financial quality (net losses and negative operating/free cash flow) despite improved leverage. Technicals are moderately supportive with price above key moving averages, while valuation is mixed—high yield but negative earnings. Recent updates add some support from strategic progress and a positive merger catalyst, but they do not fully offset core profitability and cash-flow risks.

Positive Factors

Revenue Growth

Positive revenue growth suggests that Two Harbors is effectively expanding its market presence and capitalizing on investment opportunities, which can lead to improved financial performance in the long term.

Debt Reduction

Significant reduction in debt enhances financial stability and flexibility, allowing Two Harbors to better manage its capital structure and invest in growth opportunities.

Subservicing Growth

Growth in subservicing business indicates successful expansion into third-party services, diversifying revenue streams and strengthening long-term business prospects.

Negative Factors

Profitability Challenges

Negative net profit margin highlights ongoing profitability challenges, which may hinder Two Harbors' ability to generate sustainable earnings and return value to shareholders.

Cash Flow Issues

Persistent cash flow issues could limit Two Harbors' ability to fund operations and investments, potentially impacting its long-term growth and financial health.

Litigation Settlement Impact

The significant litigation settlement expense has negatively impacted financial results, increasing expenses and reducing economic returns, which may affect future profitability.

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 financial assets in the United States. Its target assets include agency RMBS collateralized by fixed rate mortgage loans, adjustable rate mortgage loans, and hybrid adjustable-rate mortgage (ARMs); and other assets, such as financial and mortgage-related assets, including non-agency securities and non-hedging transactions. The company qualifies as a REIT for federal income tax purposes. As a REIT, the company must distribute at least 90% of annual taxable income to its stockholders. Two Harbors Investment Corp. was incorporated in 2009 and is headquartered in Minnetonka, Minnesota.

How the Company Makes Money

Two Harbors makes money primarily through the acquisition and management of mortgage-backed securities and other related financial assets. The company generates revenue from the interest income earned on its investment portfolio, which includes RMBS and other mortgage-related investments. Additionally, Two Harbors may engage in the use of leverage to enhance returns, borrowing funds to increase its investment capacity. The company also benefits from the spread between the interest income earned on its assets and the interest expenses incurred on its borrowings. Key revenue streams include the management of its investment portfolio, which may involve securitization and trading activities, as well as potential partnerships with financial institutions that provide access to capital and investment opportunities.

Two Harbors Financial Statement Overview

Summary

Two Harbors shows a mixed financial performance with positive revenue growth and improved leverage. However, profitability remains a challenge due to negative net income and cash flow issues. The company needs to focus on improving operational efficiency and cash flow management.

Income Statement

The income statement shows a mixed performance. The TTM data indicates a gross profit margin of 51.81%, which is decent, but the net profit margin is negative at -17.84%, reflecting a loss. Revenue growth is positive at 12.04%, indicating some recovery. However, the EBIT and EBITDA margins are both at 38.19%, showing operational efficiency but not translating into net profitability.

Balance Sheet

The balance sheet reveals a significant reduction in debt, with a debt-to-equity ratio of 0.15 in the TTM period, down from 4.29 in the previous year, indicating improved leverage. However, the return on equity is negative at -10.15%, suggesting inefficiencies in generating returns for shareholders. The equity ratio is not provided, but the reduction in debt is a positive sign.

Cash Flow

Cash flow analysis shows a concerning trend with negative operating cash flow and free cash flow in the TTM period. The free cash flow growth rate is extremely high at 3463.61%, but this is due to a low base effect. The operating cash flow to net income ratio is negative, indicating cash flow issues. The free cash flow to net income ratio is high at 7.91, suggesting reliance on non-operational cash flow sources.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	549.86M	510.75M	31.79M	407.18M	255.22M	-1.56B
Gross Profit	281.26M	511.01M	31.79M	407.18M	255.22M	-1.56B
EBITDA	-9.60M	0.00	560.54M	0.00	0.00	0.00
Net Income	-189.29M	298.17M	-106.37M	220.24M	187.23M	-1.63B
Balance Sheet
Total Assets	10.87B	12.20B	13.14B	13.47B	12.11B	19.52B
Cash, Cash Equivalents and Short-Term Investments	7.12B	504.88M	729.82M	8.46B	8.32B	16.04B
Total Debt	8.43B	1.28B	1.89B	1.80B	1.24B	965.62M
Total Liabilities	9.09B	10.08B	10.94B	11.28B	9.37B	16.43B
Stockholders Equity	1.77B	2.12B	2.20B	2.18B	2.74B	3.09B
Cash Flow
Free Cash Flow	-48.56M	86.88M	30.87M	-6.41M	-318.64M	9.20M
Operating Cash Flow	-21.06M	201.00M	343.51M	623.40M	423.51M	631.60M
Investing Cash Flow	1.22B	895.28M	-195.78M	-2.75B	6.31B	14.90B
Financing Cash Flow	-1.83B	-1.07B	-479.40M	1.17B	-7.30B	-14.51B

Two Harbors Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 12.28
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

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 12.28 is above the 20-day moving average (MA) of 10.62, above the 50-day MA of 9.96, and above the 200-day MA of 9.81, indicating a bullish trend. The MACD of 0.44 indicates Negative momentum. The RSI at 79.77 is Negative, neither overbought nor oversold. The STOCH value of 85.73 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TWO.

Two Harbors Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	65 Neutral	$2.17B	12.19	3.79%	4.94%	3.15%	1.96%
ORC	63 Neutral	$1.15B	15.68	7.02%	20.03%	72.30%	-54.02%
MFA	61 Neutral	$990.28M	11.39	6.90%	14.90%	5.52%	-47.72%
PMT	61 Neutral	$1.14B	14.27	6.37%	12.69%	-15.48%	-36.45%
FBRT	61 Neutral	$808.72M	12.41	5.88%	13.31%	-0.93%	-1.92%
TWO	53 Neutral	$1.27B	-4.93	-9.69%	14.29%	22.48%	50.49%
CIM	50 Neutral	$1.09B	-32.16	2.10%	11.40%	9.46%	-111.44%

Two Harbors Corporate Events

Two Harbors Announces Merger with UWM Holdings

On December 17, 2025, Two Harbors Investment Corp. announced a planned merger agreement with UWM Holdings Corporation, where Two Harbors will merge into a wholly-owned subsidiary of UWM. The merger deal, valued at approximately $1.3 billion in equity, includes exchanging shares of Two Harbors common stock for UWM common and preferred stock. The agreement has been approved by both companies’ boards, and its completion depends on regulatory clearances, shareholder approval, and other customary conditions. Additionally, Two Harbors amended its severance benefits plan to protect employees during the transition and accelerated payments, bonuses, and equity for select executives as part of tax planning measures and a restructured equity award process for CEO William Greenberg.

The most recent analyst rating on (TWO) stock is a Hold with a $10.00 price target. To see the full list of analyst forecasts on Two Harbors stock, see the TWO Stock Forecast page.

Two Harbors Announces Merger Agreement with UWM

On December 17, 2025, Two Harbors Investment Corp. and UWM Holdings Corporation announced a definitive merger agreement, where UWM will acquire Two Harbors in an all-stock transaction valued at $1.3 billion. The acquisition aims to enhance UWM’s servicing capabilities and double its mortgage servicing portfolio to $400 billion, creating synergies worth approximately $150 million annually. The merger, unanimously approved by both companies’ Boards, strengthens UWM’s leadership in the mortgage industry, expands its market reach, and provides meaningful opportunities for stockholders, brokers, and consumers. This strategic alignment also anticipates significant operational efficiencies and enhanced financial stability for the combined entity.

The most recent analyst rating on (TWO) stock is a Hold with a $10.00 price target. To see the full list of analyst forecasts on Two Harbors stock, see the TWO Stock Forecast page.