Redwood Trust, Inc. (RWT) AI Stock Analysis

Redwood Trust, Inc. is a United States specialty finance company and real estate investment trust founded in 1994. The company operates through three segments: Residential Mortgage Banking, Business Purpose Mortgage Banking, and Investment Portfolio. Its Residential Mortgage Banking segment procures residential loans through a conduit from third parties for sale, securitization, or retention, and uses derivatives to manage risk. The Business Purpose Mortgage Banking segment originates and acquires loans such as single-family rental and bridge loans. Its Investment Portfolio segment invests in retained securitizations, bridge loans, third-party residential mortgage-backed securities, Freddie Mac K-Series securitizations, reperforming loans, servicer advances, and home equity investments.

Redwood Trust reached $1.11B in revenue in FY2025, up 2.2% from $1.08B in FY2024, after dropping to $158.6M in FY2023. Despite an operating margin of 95.3% and a gross margin of 95.6% in FY2025, the company posted a net margin of -6.3% and a net income loss of -$70.0M, compared to positive net income of $54.0M in FY2024. Over the trailing twelve months, revenue was $261.6M with an operating margin of 0.1% and eps_ttm of -$0.05. In the latest quarter ended June 30, 2026, quarterly revenue fell 13.4% year-over-year, while quarterly earnings declined 52.6%.

As of June 30, 2026, Redwood Trust held $672.7M in cash and short-term investments against $27.47B in total debt, resulting in net debt of $26.80B. Shareholders' equity stood at $934.0M, representing a debt-to-equity ratio of 29.41. The company has maintained negative cash flows, recording free cash flow of -$10.09B and operating cash flow of -$10.09B in FY2025. During FY2025, cash deployment included $106.0M in dividends paid and $51.8M spent on share buybacks, contributing to a 12.7% reduction in share count over 5 years.

At a share price of $3.04 and a market capitalization of $381.9M, Redwood Trust trades at a forward P/E of 6.2x, lower than the 23.5x median of its US-listed Real Estate peers. Its price-to-sales multiple is 1.5x compared to the peer median of 3.7x, while its price-to-book ratio is 0.6x. The stock has underperformed broader markets, recording a 1-year return of -35.9% and a 5-year return of -60.3%, compared to returns of 16.8% and 83.0% for the S&P 500 (SPY) over the same periods.

Redwood Trust pays a quarterly dividend with an annual forward dividend of $0.72 per share, yielding 23.68%. The company has paid dividends for 32 consecutive years, maintaining a payout ratio of 78.3%. However, its dividend growth rate over the last 5 years annualized is -0.1%, and its most recent ex-dividend date was September 23, 2026.

Wall Street coverage consists of 4 Strong Buy, 3 Buy, and 2 Hold ratings, with zero Sell or Strong Sell recommendations. The mean price target is $5.09, which sits 67.4% above the last close of $3.04. For the fiscal year ending December 31, 2026, analysts estimate EPS of $0.99 on revenue of $141.5M. The company beat EPS estimates in 3 of the last 4 quarters, and its next earnings date is November 3, 2026.

This page is an AI-written research summary of Redwood Trust, Inc. (RWT). The text was generated on October 30, 2026 from Quotelinks data as of October 16, 2026 (company profile, annual results, latest balance sheet, valuation, price performance and analyst estimates). An automatic check rejects any draft that contains a figure not found in that data. It is not investment advice; verify figures on the linked tabs before making decisions.

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