Two Harbors Investment Corp. (TWO)
NYSE:TWO
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Two Harbors
(NYSE:TWO)
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Rating:56Neutral
Price Target:
$13.00
â–²(16.91% Upside)
Action:Reiterated
Date:05/20/26
The score is held down primarily by weak financial performance (large TTM losses, high leverage, and negative free cash flow). Offsetting factors include constructive technical momentum, attractive headline valuation and yield, and a generally positive strategic backdrop tied to the cash merger and solid liquidity—tempered by RMBS volatility and deal execution risk.
Positive Factors
MSR (Mortgage Servicing Rights) Strength
Two Harbors' strong MSR economics provide durable, fee-like cash returns that are less correlated to agency RMBS mark-to-market volatility. Consistent MSR additions, improving multiple and low delinquencies indicate recurring servicing income and scale benefits that can stabilize portfolio returns over the medium term.
Negative Factors
Elevated Leverage
Very high leverage magnifies losses from spread widening and mark-to-market swings, limiting the company's capital flexibility. With negative ROE and thin equity buffers, adverse rate or funding moves could force deleveraging or asset sales, constraining strategic options over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
MSR (Mortgage Servicing Rights) Strength
Two Harbors' strong MSR economics provide durable, fee-like cash returns that are less correlated to agency RMBS mark-to-market volatility. Consistent MSR additions, improving multiple and low delinquencies indicate recurring servicing income and scale benefits that can stabilize portfolio returns over the medium term.
Read all positive factors
Two Harbors (TWO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.31B
Dividend Yield14.29%
Average Volume (3M)2.41M
Price to Earnings (P/E)9.6
Beta (1Y)0.61
Revenue Growth-6.44%
EPS Growth-1044.78%
CountryUS
Employees477
SectorReal Estate
Sector Strength53
IndustryREIT - Mortgage
Share Statistics
EPS (TTM)-3.82
Shares Outstanding105,046,330
10 Day Avg. Volume2,864,286
30 Day Avg. Volume2,405,427
Financial Highlights & Ratios
PEG Ratio<0.01
Price to Book (P/B)0.61
Price to Sales (P/S)1.81
P/FCF Ratio-72.58
Enterprise Value/Market Cap6.94
Enterprise Value/Revenue11.92
Enterprise Value/Gross Profit13.55
Enterprise Value/Ebitda130.43
Forecast
1Y Price Target
$11.17Price Target Upside0.42% Upside
Rating ConsensusHold
Number of Analyst Covering5
EPS Forecast (FY)0.99
Revenue Forecast (FY)$9.47M
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 by earning net interest income from its investment portfolio. The core model is to (1) acquire mortgage-backed securities—predominantly agency RMBS (securities backed by mortgages and guaranteed by U.S. government...
Two Harbors Earnings Call Summary
Earnings Call Date:Apr 28, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 05, 2026
Earnings Call Sentiment Positive
The call balanced meaningful near-term challenges—quarterly mark-to-market losses, a comprehensive loss of $24.7M and a decline in book value—with material strategic and operational positives: a definitive cash merger (increased to $11.30/share) providing shareholder certainty, strong MSR performance and market demand, solid liquidity and improved risk metrics. While RMBS market volatility and spread widening pressured the securities sleeve this quarter, the company highlighted durable MSR economics, an improving origination platform, and an attractive prospective return profile. On net, the strategic certainties and operational strengths (especially MSR and the merger) outweigh the quarterly performance headwinds.Positive Updates
Definitive Cash Merger with CrossCountry (Increased Consideration)
Board executed a merger agreement with CrossCountry Mortgage; amended consideration increased from $10.80 to $11.30 per share in cash. Transaction expected to close in H2 2026, not subject to a financing condition; special shareholder meeting set for May 19 and Board unanimously recommends the transaction.
Negative Updates
Quarterly Book Value Decline and Negative Economic Return
Book value fell to $10.57 per share at March 31 from $11.13 at December 31 (≈ -5.1% change in book value). Including a $0.34 common stock dividend, the company reported a negative 2.0% quarterly economic return.
Read all updates
Q1-2026 Updates
Positive
Negative
Definitive Cash Merger with CrossCountry (Increased Consideration)
Board executed a merger agreement with CrossCountry Mortgage; amended consideration increased from $10.80 to $11.30 per share in cash. Transaction expected to close in H2 2026, not subject to a financing condition; special shareholder meeting set for May 19 and Board unanimously recommends the transaction.
Read all positive updates
Company Guidance
Management reiterated that the amended CrossCountry merger (cash consideration increased to $11.30 from $10.80) is expected to close in the second half of 2026, is not subject to a financing condition, and will be voted on at a special meeting on May 19 (regular quarterly dividends to continue, no stub dividend). On results/guidance metrics they reported Q1 book value $10.57 (from $11.13 at 12/31), a negative 2.0% quarterly economic return, a comprehensive loss of $24.7M ($0.24/sh), cash of over $500M, repayment of $261.9M convertible notes, RMBS repo spreads ~SOFR+15–18bp with weighted average repo maturity 71 days, $1.5B MSR borrowings across five lenders with $977M unused MSR financing capacity, $69M drawn (and $81M available) on servicing advances, portfolio $11.9B ($8.9B settled, $3.0B TBAs), economic debt/equity 6.4x, sensitivity to a 25bp spread tightening ~3.2%, MSR additions $152M UPB, MSR multiple 5.9x, MSR CPR 5.6% (aggregate pool speeds 9.8% vs 8.6% prior quarter), and static return estimates of 11–14% for servicing, 11–15% for securities, a pre-leverage portfolio return of 8–11.4%, and an estimated common‑equity static return of 7.3–12.9% (prospective quarterly per‑share static return $0.19–$0.34).Two Harbors Financial Statement Overview
Summary
Income Statement
38
Negative
Balance Sheet
30
Negative
Cash Flow
33
Negative
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 765.12M | 605.61M | 845.84M | 640.49M | 12.61M | -142.91M |
| Gross Profit | 673.09M | 592.88M | 884.29M | 566.36M | -81.51M | -229.16M |
| EBITDA | 69.94M | 45.52M | 952.56M | 559.83M | 582.85M | 280.59M |
| Net Income | -342.96M | -454.30M | 298.17M | -106.37M | 220.24M | 187.23M |
Balance Sheet | ||||||
| Total Assets | 10.53B | 10.86B | 12.20B | 13.14B | 13.47B | 12.11B |
| Cash, Cash Equivalents and Short-Term Investments | 476.40M | 842.46M | 7.88B | 9.06B | 8.46B | 8.32B |
| Total Debt | 8.29B | 8.56B | 9.09B | 9.91B | 10.40B | 8.90B |
| Total Liabilities | 8.80B | 9.07B | 10.08B | 10.94B | 11.28B | 9.37B |
| Stockholders Equity | 1.73B | 1.79B | 2.12B | 2.20B | 2.18B | 2.74B |
Cash Flow | ||||||
| Free Cash Flow | -69.87M | -15.07M | 86.88M | 30.87M | -6.41M | -318.64M |
| Operating Cash Flow | 33.58M | 88.92M | 201.00M | 343.51M | 623.40M | 423.51M |
| Investing Cash Flow | 2.90B | 911.61M | 895.28M | -195.78M | -2.75B | 6.31B |
| Financing Cash Flow | -2.87B | -756.22M | -1.07B | -479.40M | 1.17B | -7.30B |
Two Harbors Technical Analysis
Positive
11.12
Price Trends
11.18
Positive
11.09
Positive
10.16
Positive
Market Momentum
0.40
Positive
67.61
Neutral
44.58
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 11.12 is below the 20-day moving average (MA) of 12.09, below the 50-day MA of 11.18, and above the 200-day MA of 10.16, indicating a bullish trend. The MACD of 0.40 indicates Positive momentum. The RSI at 67.61 is Neutral, neither overbought nor oversold. The STOCH value of 44.58 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 |
|---|---|---|---|---|---|---|---|
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% | |
62 Neutral | $668.04M | 14.16 | 4.95% | 13.31% | 5.47% | -22.89% | |
56 Neutral | $1.31B | 9.57 | -19.11% | 14.29% | -6.44% | -1044.78% | |
56 Neutral | $1.11B | -5.98 | 0.75% | 11.40% | 10.27% | -151.66% | |
56 Neutral | $966.18M | -252.36 | 7.43% | 14.90% | 2.05% | -11.87% | |
54 Neutral | $915.62M | 10.31 | 7.62% | 12.69% | 23.64% | 24.40% | |
54 Neutral | $1.36B | -16.67 | 10.24% | 20.03% | 81.33% | 86.84% |
* Real Estate Sector Average
TWO
Two Harbors
12.51
2.65
26.86%
CIM
Chimera Investment
13.25
1.66
14.31%
MFA
MFA Financial
9.51
1.48
18.37%
PMT
PennyMac Mortgage
10.50
-0.32
-2.94%
ORC
Orchid Island Capital
6.78
1.13
19.94%
FBRT
Franklin BSP Realty Trust
8.68
-0.88
-9.18%
Two Harbors Corporate Events
Legal ProceedingsM&A TransactionsShareholder Meetings
Two Harbors Adjourns Vote on CrossCountry Acquisition
Positive
May 19, 2026
On May 19, 2026, Two Harbors adjourned its virtual special meeting of stockholders to May 28, 2026, to allow more time to solicit proxies in favor of its all-cash acquisition by CrossCountry Intermediate Holdco, an affiliate of CrossCountry Mortga...
Legal ProceedingsM&A TransactionsShareholder Meetings
Two Harbors faces lawsuit challenging CrossCountry merger process
Negative
May 15, 2026
On May 13, 2026, Two Harbors disclosed that stockholder George Assad filed a federal lawsuit in Maryland alleging the company and its directors violated U.S. securities laws by issuing a materially incomplete and misleading proxy statement related...
DividendsM&A Transactions
Two Harbors Sets Stub Dividend Ahead of Merger Close
Positive
May 14, 2026
On May 13, 2026, CrossCountry Intermediate Holdco, LLC and its merger subsidiary waived a merger agreement restriction to allow Two Harbors to declare and pay a pro-rated “stub period” dividend on its common stock for the quarter in wh...
Delistings and Listing ChangesDividendsM&A Transactions
Two Harbors Increases Cash Consideration in CrossCountry Merger
Positive
May 8, 2026
Two Harbors Investment Corp. and CrossCountry Intermediate Holdco, an affiliate of CrossCountry Mortgage, amended their merger agreement on May 7, 2026, raising the all-cash consideration for Two Harbors shareholders to $12.00 per share from $11.3...
Business Operations and StrategyDelistings and Listing ChangesM&A TransactionsShareholder Meetings
Two Harbors Boosts CrossCountry Merger Cash Offer Terms
Positive
Apr 29, 2026
On April 28, 2026, Two Harbors Investment Corp. and CrossCountry Intermediate Holdco, LLC amended their March 27 merger agreement, raising the all-cash consideration for Two Harbors common stockholders to $11.30 per share from $10.80 after the boa...
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.