Redwood (RWT) AI Stock Analysis

• Market Cap: $757.44M
• Dividend Yield: 12.65%
• Average Volume (3M): 634.92K
• Price to Earnings (P/E): 26.8
• Beta (1Y): 0.88
• Revenue Growth: 6.72%
• EPS Growth: 228.13%
• Country: US
• Employees: 283
• Sector: Real Estate
• Sector Strength: 69
• Industry: REIT - Mortgage
• EPS (TTM): 0.10
• Shares Outstanding: 133,117,570
• 10 Day Avg. Volume: 565,658
• 30 Day Avg. Volume: 634,919
• PEG Ratio: 0.03
• Price to Book (P/B): 0.73
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -5.70
• Enterprise Value/Market Cap: 22.80
• Enterprise Value/Revenue: 10.36
• Enterprise Value/Gross Profit: 44.47
• Enterprise Value/Ebitda: 6.21
• 1Y Price Target: $7.50
• Price Target Upside: 31.81% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8

• Rating: 48 Neutral
• Price Target: ―

Redwood Trust is navigating a period of transition, balancing positive strategic growth with historical financial volatility and cash flow management issues. Although recent earnings and corporate events highlight progress, the technical outlook suggests caution, and valuation metrics offer mixed signals. Investors should weigh the high dividend yield against the risks of sustaining financial improvements.

Positive Factors

Investment opportunities

RWT is seeing strong jumbo residential mortgage investment flows, benefiting as small-to-medium sized banks are less interested in keeping mortgages on balance sheet.

Market presence

Over 60% of the top 50 jumbo mortgage loan originators now have a relationship with Redwood, indicating strong market presence and potential for increased loan sales.

Valuation

Redwood Trust's shares are trading below the estimated book value, suggesting potential for price appreciation.

Negative Factors

Earnings estimates

The estimate for the upcoming fourth quarter earnings is lower than both prior estimates and Street consensus, indicating possible short-term challenges.

Earnings performance

Fourth-quarter 2024 results were marked by below-consensus and sequentially lower earnings available for distribution and a decline in book value.

Net loss

Redwood Trust reported a fourth-quarter GAAP net loss of $8.4 million, reflecting challenges in maintaining earnings levels.

Redwood Business Overview & Revenue Model

Company Description

Redwood Trust, Inc., together with its subsidiaries, operates as a specialty finance company in the United States. The company operates through three segments: Residential Mortgage Banking, Business Purpose Mortgage Banking, and Investment Portfolio. The Residential Mortgage Banking segment operates a mortgage loan conduit that acquires residential loans from third-party originators for subsequent sale, securitization, or transfer to its investment portfolio. This segment also offers derivative financial instruments to manage risks associated with residential loans. The Business Purpose Mortgage Banking segment operates a platform that originates and acquires business purpose loans, such as single-family rental and bridge loans for subsequent securitization, sale, or transfer into its investment portfolio. The Investment Portfolio segment invests in securities retained from residential and business purpose securitization activities, and residential and small-balance multifamily bridge loans, as well as residential mortgage-backed securities issued by third parties, Freddie Mac K-Series multifamily loan securitizations and reperforming loan securitizations, servicer advance investments, home equity investments, and other housing-related investments. The company qualifies as a real estate investment trust (REIT) for federal income tax purposes. As a REIT, it intends to distribute at least 90% of its taxable income as dividends to shareholders. Redwood Trust, Inc. was incorporated in 1994 and is headquartered in Mill Valley, California.

How the Company Makes Money

Redwood Trust, Inc. generates revenue primarily through interest income from its portfolio of mortgage-backed securities and residential and multi-family loans. The company earns money by originating residential loans, which are then sold or securitized, generating origination fees. Additionally, Redwood benefits from the spread between the interest income it receives on its assets and the interest it pays on its liabilities. The company also engages in strategic partnerships within the real estate and mortgage sectors to enhance its product offerings and expand its market reach, contributing to its revenue streams.

Redwood Financial Statement Overview

Summary

Redwood's financials reflect both opportunities and risks. Revenue and profitability improved recently, but historical volatility and cash flow issues are concerning. The elimination of debt in 2024 is a positive sign, yet sustaining this improvement remains uncertain.

Income Statement

The company shows volatile revenue trends with a significant increase in 2024 compared to previous years. Recent gross profit margins are high, but net profit margins have been erratic, reflecting inconsistent profitability. EBIT margins improved sharply in 2024, indicating better operational efficiency, but the absence of EBITDA data limits full margin analysis.

Balance Sheet

The balance sheet shows improvement in stockholders' equity compared to previous years, indicating stability. The debt-to-equity ratio has improved as total debt was eliminated by 2024, reducing financial risk. However, equity remains a small portion of total assets, suggesting potential vulnerabilities.

Cash Flow

The cash flow statement indicates significant fluctuations, with operating cash flow often negative, pointing to cash management issues. Free cash flow remains a concern as it has been negative in several years, although financing activities in 2024 provided substantial cash inflows.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
417.90M	945.16M	165.63M	-27.00M	526.00M	-363.00M
	Gross Profit
388.40M	256.91M	136.56M	-41.82M	493.91M	-380.37M
	EBIT
259.73M	808.77M	10.57M	368.96M	356.22M	-439.41M
	EBITDA
714.73M	0.00	0.00	384.88M	0.00	0.00
	Net Income Common Stockholders
39.89M	54.00M	-6.27M	-163.52M	319.61M	-581.85M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
259.92M	245.16M	347.74M	388.05M	656.79M	679.46M
	Total Assets
19.87B	18.26B	14.50B	13.03B	14.71B	10.36B
	Total Debt
17.86B	16.39B	12.84B	11.50B	13.07B	8.85B
	Net Debt
17.60B	16.15B	12.55B	11.25B	12.43B	8.39B
	Total Liabilities
18.69B	17.07B	13.30B	11.95B	13.32B	9.24B
	Stockholders Equity
1.18B	1.19B	1.20B	1.08B	1.39B	1.11B
Cash Flow		Free Cash Flow
-6.86B	-5.86B	-2.02B	-139.14M	-5.69B	-505.47M
	Operating Cash Flow
-6.86B	-5.86B	-2.02B	-139.14M	-5.69B	-505.47M
	Investing Cash Flow
2.85B	2.54B	908.72M	213.89M	1.40B	4.07B
	Financing Cash Flow
4.02B	3.27B	1.15B	-276.87M	4.28B	-3.31B

Redwood Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 5.69
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RWT, the sentiment is Neutral. The current price of 5.69 is above the 20-day moving average (MA) of 5.63, above the 50-day MA of 5.67, and below the 200-day MA of 6.39, indicating a neutral trend. The MACD of >-0.01 indicates Negative momentum. The RSI at 49.86 is Neutral, neither overbought nor oversold. The STOCH value of 72.98 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for RWT.

Redwood Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TRTX	67 Neutral	$632.47M	11.37	6.22%	12.12%	-13.64%	―
NYMT	64 Neutral	$618.54M	―	2.63%	11.68%	33.94%	96.99%
Sector *	61 Neutral	$2.83B	10.72	0.40%	6.10%	5.80%	-21.26%
ORC	61 Neutral	$750.98M	17.48	5.23%	20.45%	61.59%	―
KREF	54 Neutral	$625.03M	57.08	2.42%	10.88%	-16.46%	―
RWT	48 Neutral	$757.44M	26.83	2.92%	12.65%	6.72%	228.13%
RC	46 Neutral	$750.23M	―	-12.42%	11.36%	-31.47%	-204.79%

Redwood Corporate Events

Redwood Trust Reports Strong Q1 2025 Financial Results

On April 30, 2025, Redwood Trust, Inc. reported its financial results for the first quarter of 2025, ending March 31. The company achieved a GAAP net income of $14.4 million and declared a regular quarterly dividend of $0.18 per common share. The Sequoia Mortgage Banking segment reported a significant increase in loan activity, with $4.0 billion locked, representing a 73% increase from the previous quarter. The company’s recourse leverage ratio slightly increased to 2.5x, and it maintained a strong cash position with $260 million in unrestricted cash and cash equivalents.

Spark’s Take on RWT Stock

According to Spark, TipRanks’ AI Analyst, RWT is a Neutral.

Redwood Trust’s overall score reflects a company in transition with strengths in strategic growth initiatives and dividend yield. However, financial volatility, cash flow challenges, and mixed technical signals suggest caution. The company’s strategic focus and recent improvements are positive, but sustainability remains a key question.

To see Spark’s full report on RWT stock, click here.

Redwood Reports Q1 Growth Amid Market Challenges

In the first quarter of 2025, Redwood Trust reported a 1% to 1.5% increase in GAAP book value per share, despite broader market challenges. The company achieved significant growth in its jumbo lock volumes and streamlined its mortgage banking operations, positioning itself to capitalize on changes in housing finance policy. Redwood’s strategic partnerships and focus on non-Agency products are expected to drive further growth, while the company adapts to market volatility and policy shifts.

Spark’s Take on RWT Stock

According to Spark, TipRanks’ AI Analyst, RWT is a Neutral.

Redwood Trust’s overall score reflects a company in transition. Financial performance shows improvement but remains volatile, with cash flow challenges posing risks. Technical indicators signal bearish sentiment, while valuation highlights a strong dividend yield and moderate P/E ratio. The recent earnings call provides a positive outlook tempered by existing challenges.

To see Spark’s full report on RWT stock, click here.

Redwood Declares Q1 2025 Dividends for Shareholders

On March 13, 2025, Redwood Trust, Inc. announced that its Board of Directors declared first quarter 2025 dividends for both common and preferred stock. The common stock dividend of $0.18 per share, consistent with the previous quarter, is payable on March 31, 2025, while the Series A preferred stock dividend of $0.625 per share is payable on April 15, 2025. This decision underscores Redwood’s commitment to providing stable returns to shareholders and highlights its ongoing role in the housing finance sector.

Redwood Reports Q4 2024 Loss, Increases Dividend

On February 13, 2025, Redwood Trust announced its financial results for the fourth quarter of 2024, revealing a GAAP net loss of $8.4 million and a decrease in book value per share. Despite the loss, the company saw a 5.9% increase in its quarterly dividend and achieved significant operational milestones, including increased loan distribution and securitization activities through its Sequoia and CoreVest segments. The company also successfully extended its debt maturity profile and enhanced its financing capacity, indicating strategic positioning for future growth in the housing finance market.