Two Harbors (TWO) AI Stock Analysis

• Market Cap: $1.02B
• Dividend Yield: 17.68%
• Average Volume (3M): 1.82M
• Price to Earnings (P/E): 5.1
• Beta (1Y): 1.17
• Revenue Growth: -21.95%
• EPS Growth: -528.94%
• Country: US
• Employees: 477
• Sector: Real Estate
• Sector Strength: 53
• Industry: REIT - Mortgage
• EPS (TTM): 0.28
• Shares Outstanding: 104,154,720
• 10 Day Avg. Volume: 1,756,805
• 30 Day Avg. Volume: 1,824,990
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 10.83
• Enterprise Value/Revenue: 11.04
• Enterprise Value/Gross Profit: 27.32
• Enterprise Value/Ebitda: 32.09
• 1Y Price Target: $10.80
• Price Target Upside: 9.76% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 9

• Rating: 53 Neutral
• Price Target: $10.00 ▲(1.63% Upside)

Two Harbors' overall stock score is primarily impacted by its financial performance challenges, including declining revenues and profitability issues. Technical analysis provides some neutral signals, while valuation highlights a high dividend yield but also profitability concerns. The earnings call further underscores financial difficulties with significant losses, affecting the overall outlook.

Positive Factors

Low Leverage Position

A low leverage position enhances financial stability, reducing risk and providing flexibility for strategic investments and growth opportunities.

AI Technology Investments

Investing in AI can improve operational efficiency and customer experience, potentially leading to cost reductions and enhanced competitive positioning.

Stable RMBS and MSR Market

A stable RMBS and MSR market supports consistent revenue streams and reduces volatility, aiding in long-term planning and financial performance.

Negative Factors

Declining Revenue Trend

A declining revenue trend can indicate challenges in market demand or competitive positioning, potentially impacting long-term profitability and growth.

Significant Loss Contingency Accrual

Significant legal reserves can strain financial resources and increase leverage, affecting the company's capital structure and long-term financial health.

Negative Cash Flow Growth

Negative cash flow growth indicates challenges in converting income into cash, which can limit investment capacity and affect operational sustainability.

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 demonstrates strong EBIT margins and efficient cash flow generation, indicating operational efficiency. However, inconsistent revenue growth, negative net income, and declining return on equity highlight potential challenges. The balance sheet shows low leverage, but the negative ROE is concerning, emphasizing the need for improved profitability and revenue stabilization.

Income Statement

Two Harbors has experienced significant volatility in its revenue, with the TTM showing a substantial decline compared to the previous year. Gross profit margin has remained positive but inconsistent, indicating variable cost management. The EBIT margin is notably high in the TTM, but this is overshadowed by a negative net income, signaling potential issues in non-operational expenses or tax impacts. Overall, while some profitability measures are strong, the inconsistency in revenue and net losses are concerning.

Balance Sheet

The company's financial leverage appears manageable with a low debt-to-equity ratio, suggesting limited reliance on debt financing. However, the equity ratio is modest, indicating a balanced but not overly strong capital structure. Return on Equity (ROE) in the TTM is negative, reflecting the net loss, which is a critical area of concern. Despite a stable asset base, the negative ROE and recent net losses dampen the overall balance sheet health.

Cash Flow

Two Harbors' cash flow demonstrates strong operating cash flows relative to net income, indicating efficient cash generation from core activities. The free cash flow has shown significant growth in the TTM, reflecting improved cash management and capital expenditure control. However, the disparity between operating cash flow and net income suggests potential non-cash charges. Overall, while cash flow generation appears robust, the negative net income raises questions about sustainable profitability.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.01B	1.14B	257.08M	12.61M	-142.91M	-862.56M
Gross Profit	406.30M	510.75M	161.59M	-81.51M	191.42M	-1.63B
EBITDA	345.94M	344.75M	559.83M	582.85M	191.42M	-1.38B
Net Income	-311.64M	251.68M	-106.37M	220.24M	187.23M	-1.63B
Balance Sheet
Total Assets	12.96B	12.20B	13.14B	13.47B	12.11B	19.52B
Cash, Cash Equivalents and Short-Term Investments	8.98B	7.88B	9.06B	1.13B	1.15B	16.04B
Total Debt	260.94M	9.11B	9.93B	10.44B	1.24B	965.62M
Total Liabilities	11.07B	10.08B	10.94B	11.28B	9.37B	16.43B
Stockholders Equity	1.89B	2.12B	2.20B	2.18B	2.74B	3.09B
Cash Flow
Free Cash Flow	-4.68M	86.88M	343.51M	-6.41M	-318.64M	9.20M
Operating Cash Flow	66.02M	201.00M	343.51M	623.40M	423.51M	631.60M
Investing Cash Flow	-229.61M	895.28M	-195.78M	-2.75B	6.31B	14.90B
Financing Cash Flow	-35.96M	-1.07B	-479.40M	1.17B	-7.30B	-14.51B

Two Harbors Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 9.84
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TWO, the sentiment is Negative. The current price of 9.84 is below the 20-day moving average (MA) of 10.02, below the 50-day MA of 10.01, and below the 200-day MA of 10.94, indicating a bearish trend. The MACD of -0.06 indicates Positive momentum. The RSI at 44.41 is Neutral, neither overbought nor oversold. The STOCH value of 28.05 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TWO.

Two Harbors Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EFC	69 Neutral	1.32B	10.78	9.29%	11.85%	20.32%	1.58%
DX	60 Neutral	1.57B	15.37	―	15.87%	35.01%	1115.85%
ARI	57 Neutral	1.42B	-73.51	-0.23%	9.77%	-26.29%	-342.06%
PMT	55 Neutral	1.06B	16.68	8.30%	13.13%	1.71%	-56.69%
TWO	53 Neutral	$1.02B	5.06	-14.78%	17.68%	-21.95%	-528.94%
ARR	48 Neutral	1.64B	-62.08	―	19.77%	157.34%	91.67%
Sector *	65 Neutral	$2.17B	12.19	3.79%	4.94%	3.15%	1.96%

Two Harbors Corporate Events

Two Harbors Settles Lawsuit, Announces Dividends

On August 20, 2025, Two Harbors Investment Corp. announced a settlement agreement with Pine River entities, resolving all claims from previous lawsuits. The company agreed to a $375 million payment to Pine River, which will dismiss all claims and relinquish intellectual property rights. This resolution is seen as a significant step for Two Harbors, enabling it to focus on its strategic goals. Additionally, the company declared its third-quarter 2025 dividends for common and preferred stock, reflecting its financial position post-settlement. The company also expanded its subservicing business by signing a new client, increasing its third-party subservicing business to $31 billion in unpaid principal balance.

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.