Two Harbors (TWO) AI Stock Analysis

• Market Cap: $1.05B
• Dividend Yield: 16.24%
• Average Volume (3M): 1.46M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.72
• 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: 104,155,815
• 10 Day Avg. Volume: 1,290,002
• 30 Day Avg. Volume: 1,458,244
• PEG Ratio: -0.02
• Price to Book (P/B): 0.58
• Price to Sales (P/S): 1.45
• P/FCF Ratio: 14.10
• Enterprise Value/Market Cap: 8.77
• Enterprise Value/Revenue: 8.14
• Enterprise Value/Gross Profit: 15.71
• Enterprise Value/Ebitda: 21.32
• 1Y Price Target: $10.90
• Price Target Upside: 6.86% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5
• EPS Forecast (FY): 1.33
• Revenue Forecast (FY): -$104.62M

• Rating: 53 Neutral
• Price Target: $10.00 ▼(-1.96% Downside)

Two Harbors' overall stock score reflects a mixed financial performance with challenges in profitability and cash flow. Positive technical indicators and a high dividend yield provide some support, while the earnings call reveals both strategic progress and financial setbacks. The company's focus on growth and MSR strategy offers potential for future improvement.

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 faces significant financial challenges with declining revenues and profitability issues. Despite maintaining a low leverage position, the company's ability to generate cash flow and returns on equity is weak, necessitating strategic adjustments.

Income Statement

The income statement shows a declining revenue trend with a negative revenue growth rate of -8.17% in the TTM period. Gross profit margin and EBIT margin are relatively stable, but the company is experiencing significant net losses, reflected in a negative net profit margin of -30.98%. The EBIT margin remains positive at 34.39%, indicating operational efficiency despite revenue challenges.

Balance Sheet

The balance sheet reflects a strong equity position with a low debt-to-equity ratio of 0.14 in the TTM period, indicating low leverage. However, the return on equity is negative at -14.97%, suggesting inefficiencies in generating returns from equity. The equity ratio is not provided, but the overall low leverage is a positive aspect.

Cash Flow

Cash flow analysis reveals a concerning free cash flow growth rate of -101.89% in the TTM period, indicating cash flow challenges. The operating cash flow to net income ratio is low at 0.0069, and the free cash flow to net income ratio is negative, highlighting issues in converting income into cash flow.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.13B	845.84M	257.08M	12.61M	-142.91M	-862.56M
Gross Profit	583.89M	884.29M	161.59M	-81.51M	191.42M	-1.63B
EBITDA	430.35M	344.75M	559.83M	582.85M	191.42M	-1.38B
Net Income	-201.07M	251.68M	-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	7.88B	9.06B	1.13B	1.15B	16.04B
Total Debt	261.37M	9.11B	9.93B	10.44B	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	-166.67M	86.88M	343.51M	-6.41M	-318.64M	9.20M
Operating Cash Flow	-21.06M	201.00M	343.51M	623.40M	423.51M	631.60M
Investing Cash Flow	2.15B	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: 10.20
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• 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 10.2 is above the 20-day moving average (MA) of 9.78, above the 50-day MA of 9.73, and below the 200-day MA of 10.34, indicating a neutral trend. The MACD of 0.12 indicates Negative momentum. The RSI at 62.87 is Neutral, neither overbought nor oversold. The STOCH value of 80.36 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	65 Neutral	$1.09B	14.81	7.02%	19.62%	72.30%	-54.02%
CIM	63 Neutral	$1.07B	―	2.10%	11.42%	9.46%	-111.44%
MFA	62 Neutral	$969.84M	11.15	6.90%	14.93%	5.52%	-47.72%
PMT	58 Neutral	$1.11B	13.98	6.37%	12.41%	-15.48%	-36.45%
FBRT	58 Neutral	$847.08M	13.00	5.88%	13.42%	-0.93%	-1.92%
TWO	53 Neutral	$1.05B	―	-9.69%	16.24%	22.48%	50.49%

Two Harbors Corporate Events

Two Harbors Reports Q3 2025 Financial Results

Two Harbors Investment Corp., a real estate investment trust (REIT) focused on mortgage servicing rights (MSR) and residential mortgage-backed securities (RMBS), has announced its financial results for the third quarter of 2025.

Two Harbors (TWO) Earnings Call: Mixed Sentiments Amid Growth

The recent earnings call of Two Harbors Investment Corp. presented a mixed sentiment, reflecting both significant achievements and challenges. While the company celebrated milestones such as growth in subservicing and strong performance in originations, these were overshadowed by the financial impacts of a litigation settlement expense and a comprehensive loss, which led to an increased expense ratio.

Two Harbors Files Prospectus for Share Offering

On September 19, 2025, Two Harbors Investment Corp. filed a new prospectus supplement with the SEC to offer and sell shares under its existing at-the-market equity offering program. This move follows the amendment and restatement of its Equity Distribution Agreement with Citizens JMP Securities and a new agreement with BTIG, LLC. The agreements allow the company to sell up to 15,000,000 shares through these agents, with sales potentially occurring on the NYSE or through market makers. The sales agents will receive up to 2% of the gross proceeds as compensation, and Two Harbors has agreed to indemnify them against certain liabilities.

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.