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REDWOOD TRUST INC (RWT) Stock Fundamental Analysis

NYSE:RWT - New York Stock Exchange, Inc. - US7580754023 - REIT - Currency: USD

6.52  +0.01 (+0.15%)

Fundamental Rating

4

Taking everything into account, RWT scores 4 out of 10 in our fundamental rating. RWT was compared to 64 industry peers in the Mortgage Real Estate Investment Trusts (REITs)" industry. RWT may be in some trouble as it scores bad on both profitability and health. RWT is not overvalued while it is showing excellent growth. This is an interesting combination.


Dividend Valuation Growth Profitability Health

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2

1. Profitability

1.1 Basic Checks

In the past year RWT was profitable.
RWT had a negative operating cash flow in the past year.
The reported net income has been mixed in the past 5 years: RWT reported negative net income in multiple years.
In the past 5 years RWT always reported negative operating cash flow.
RWT Yearly Net Income VS EBIT VS OCF VS FCFRWT Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 -2B -4B

1.2 Ratios

RWT has a Return On Assets of 0.38%. This is comparable to the rest of the industry: RWT outperforms 46.88% of its industry peers.
The Return On Equity of RWT (5.77%) is comparable to the rest of the industry.
With a Return On Invested Capital value of 0.46%, RWT perfoms like the industry average, outperforming 54.69% of the companies in the same industry.
Industry RankSector Rank
ROA 0.38%
ROE 5.77%
ROIC 0.46%
ROA(3y)0.24%
ROA(5y)-0.8%
ROE(3y)1.91%
ROE(5y)-7.56%
ROIC(3y)N/A
ROIC(5y)N/A
RWT Yearly ROA, ROE, ROICRWT Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 20 -20 -40

1.3 Margins

RWT has a Profit Margin (7.52%) which is comparable to the rest of the industry.
RWT has a Operating Margin (11.30%) which is comparable to the rest of the industry.
In the last couple of years the Operating Margin of RWT has declined.
The Gross Margin of RWT (15.60%) is worse than 73.44% of its industry peers.
In the last couple of years the Gross Margin of RWT has declined.
Industry RankSector Rank
OM 11.3%
PM (TTM) 7.52%
GM 15.6%
OM growth 3Y-20.37%
OM growth 5Y-28.64%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-11.65%
GM growth 5Y-16.54%
RWT Yearly Profit, Operating, Gross MarginsRWT Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 50 -50 -100

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1

2. Health

2.1 Basic Checks

RWT has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, RWT has more shares outstanding
RWT has more shares outstanding than it did 5 years ago.
The debt/assets ratio for RWT has been reduced compared to a year ago.
RWT Yearly Shares OutstandingRWT Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 20M 40M 60M 80M 100M
RWT Yearly Total Debt VS Total AssetsRWT Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 5B 10B 15B

2.2 Solvency

Based on the Altman-Z score of 0.07, we must say that RWT is in the distress zone and has some risk of bankruptcy.
RWT has a better Altman-Z score (0.07) than 62.50% of its industry peers.
A Debt/Equity ratio of 13.75 is on the high side and indicates that RWT has dependencies on debt financing.
With a Debt to Equity ratio value of 13.75, RWT is not doing good in the industry: 95.31% of the companies in the same industry are doing better.
Industry RankSector Rank
Debt/Equity 13.75
Debt/FCF N/A
Altman-Z 0.07
ROIC/WACC0.1
WACC4.65%
RWT Yearly LT Debt VS Equity VS FCFRWT Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 5B -5B 10B

2.3 Liquidity

RWT has a Current Ratio of 0.20. This is a bad value and indicates that RWT is not financially healthy enough and could expect problems in meeting its short term obligations.
RWT's Current ratio of 0.20 is in line compared to the rest of the industry. RWT outperforms 54.69% of its industry peers.
RWT has a Quick Ratio of 0.20. This is a bad value and indicates that RWT is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.20, RWT is in line with its industry, outperforming 54.69% of the companies in the same industry.
Industry RankSector Rank
Current Ratio 0.2
Quick Ratio 0.2
RWT Yearly Current Assets VS Current LiabilitesRWT Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 500M 1B 1.5B 2B

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7

3. Growth

3.1 Past

RWT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 251.72%, which is quite impressive.
Measured over the past years, RWT shows a very negative growth in Earnings Per Share. The EPS has been decreasing by -38.30% on average per year.
RWT shows a strong growth in Revenue. In the last year, the Revenue has grown by 32.69%.
The Revenue has been growing by 14.94% on average over the past years. This is quite good.
EPS 1Y (TTM)251.72%
EPS 3Y-57.4%
EPS 5Y-38.3%
EPS Q2Q%100%
Revenue 1Y (TTM)32.69%
Revenue growth 3Y9.92%
Revenue growth 5Y14.94%
Sales Q2Q%27.5%

3.2 Future

The Earnings Per Share is expected to grow by 74.59% on average over the next years. This is a very strong growth
RWT is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 11.36% yearly.
EPS Next Y253.77%
EPS Next 2Y126.59%
EPS Next 3Y74.59%
EPS Next 5YN/A
Revenue Next Year3.83%
Revenue Next 2Y10.63%
Revenue Next 3Y11.36%
Revenue Next 5YN/A

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
RWT Yearly Revenue VS EstimatesRWT Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 200M 400M 600M
RWT Yearly EPS VS EstimatesRWT Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 0 2 -2 -4

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6

4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 14.82, RWT is valued correctly.
RWT's Price/Earnings is on the same level as the industry average.
When comparing the Price/Earnings ratio of RWT to the average of the S&P500 Index (28.47), we can say RWT is valued slightly cheaper.
Based on the Price/Forward Earnings ratio of 7.94, the valuation of RWT can be described as very cheap.
Based on the Price/Forward Earnings ratio, RWT is valued a bit cheaper than the industry average as 70.31% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 92.74, RWT is valued rather cheaply.
Industry RankSector Rank
PE 14.82
Fwd PE 7.94
RWT Price Earnings VS Forward Price EarningsRWT Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 20 40 60 80

4.2 Price Multiples

RWT's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. RWT is cheaper than 76.56% of the companies in the same industry.
Industry RankSector Rank
P/FCF N/A
EV/EBITDA 129.22
RWT Per share dataRWT EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 0 -10 -20 -30 -40

4.3 Compensation for Growth

The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
A more expensive valuation may be justified as RWT's earnings are expected to grow with 74.59% in the coming years.
PEG (NY)0.06
PEG (5Y)N/A
EPS Next 2Y126.59%
EPS Next 3Y74.59%

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4

5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 10.34%, RWT is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 13.24, RWT's dividend is way lower than its industry peers. On top of this 84.38% of the companies listed in the same industry pay a better dividend than RWT!
RWT's Dividend Yield is rather good when compared to the S&P500 average which is at 2.28.
Industry RankSector Rank
Dividend Yield 10.34%

5.2 History

The dividend of RWT decreases each year by -8.56%.
RWT has been paying a dividend for at least 10 years, so it has a reliable track record.
Dividend Growth(5Y)-8.56%
Div Incr Years0
Div Non Decr Years0
RWT Yearly Dividends per shareRWT Yearly Dividends per shareYearly Dividends per share 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0.2 0.4 0.6 0.8 1

5.3 Sustainability

137.02% of the earnings are spent on dividend by RWT. This is not a sustainable payout ratio.
DP137.02%
EPS Next 2Y126.59%
EPS Next 3Y74.59%
RWT Yearly Income VS Free CF VS DividendRWT Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 -2B -4B
RWT Dividend Payout.RWT Dividend Payout, showing the Payout Ratio.RWT Dividend Payout.PayoutRetained Earnings

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REDWOOD TRUST INC

NYSE:RWT (2/5/2025, 10:38:27 AM)

6.52

+0.01 (+0.15%)

Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryMortgage Real Estate Investment Trusts (REITs)"
Earnings (Last)10-30 2024-10-30/amc
Earnings (Next)02-13 2025-02-13/amc
Inst Owners79.44%
Inst Owner Change0.23%
Ins Owners1.14%
Ins Owner Change1.8%
Market Cap862.40M
Analysts77.14
Price Target8.41 (28.99%)
Short Float %3.11%
Short Ratio3.95
Dividend
Industry RankSector Rank
Dividend Yield 10.34%
Yearly Dividend0.76
Dividend Growth(5Y)-8.56%
DP137.02%
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)11.58%
Min EPS beat(2)-2.9%
Max EPS beat(2)26.06%
EPS beat(4)1
Avg EPS beat(4)-13.54%
Min EPS beat(4)-63.54%
Max EPS beat(4)26.06%
EPS beat(8)1
Avg EPS beat(8)-46.51%
EPS beat(12)2
Avg EPS beat(12)-81.33%
EPS beat(16)6
Avg EPS beat(16)-45.5%
Revenue beat(2)0
Avg Revenue beat(2)-14.82%
Min Revenue beat(2)-15.25%
Max Revenue beat(2)-14.39%
Revenue beat(4)1
Avg Revenue beat(4)-13.48%
Min Revenue beat(4)-27.22%
Max Revenue beat(4)2.94%
Revenue beat(8)2
Avg Revenue beat(8)25.27%
Revenue beat(12)6
Avg Revenue beat(12)117.94%
Revenue beat(16)10
Avg Revenue beat(16)214.23%
PT rev (1m)-0.67%
PT rev (3m)-1.84%
EPS NQ rev (1m)-3.16%
EPS NQ rev (3m)7.71%
EPS NY rev (1m)0.26%
EPS NY rev (3m)6.27%
Revenue NQ rev (1m)-2.63%
Revenue NQ rev (3m)-8.1%
Revenue NY rev (1m)-0.61%
Revenue NY rev (3m)-4.43%
Valuation
Industry RankSector Rank
PE 14.82
Fwd PE 7.94
P/S 0.92
P/FCF N/A
P/OCF N/A
P/B 0.71
P/tB 0.73
EV/EBITDA 129.22
EPS(TTM)0.44
EY6.75%
EPS(NY)0.82
Fwd EY12.6%
FCF(TTM)-46.55
FCFYN/A
OCF(TTM)-46.55
OCFYN/A
SpS7.1
BVpS9.25
TBVpS8.91
PEG (NY)0.06
PEG (5Y)N/A
Profitability
Industry RankSector Rank
ROA 0.38%
ROE 5.77%
ROCE 0.66%
ROIC 0.46%
ROICexc 0.47%
ROICexgc 0.47%
OM 11.3%
PM (TTM) 7.52%
GM 15.6%
FCFM N/A
ROA(3y)0.24%
ROA(5y)-0.8%
ROE(3y)1.91%
ROE(5y)-7.56%
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3Y-22.41%
ROICexcg growth 5Y-20.96%
ROICexc growth 3Y-22.4%
ROICexc growth 5Y-20.92%
OM growth 3Y-20.37%
OM growth 5Y-28.64%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-11.65%
GM growth 5Y-16.54%
F-Score4
Asset Turnover0.05
Health
Industry RankSector Rank
Debt/Equity 13.75
Debt/FCF N/A
Debt/EBITDA 141.28
Cap/Depr N/A
Cap/Sales N/A
Interest Coverage 0.12
Cash Conversion N/A
Profit Quality N/A
Current Ratio 0.2
Quick Ratio 0.2
Altman-Z 0.07
F-Score4
WACC4.65%
ROIC/WACC0.1
Cap/Depr(3y)N/A
Cap/Depr(5y)N/A
Cap/Sales(3y)N/A
Cap/Sales(5y)N/A
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)251.72%
EPS 3Y-57.4%
EPS 5Y-38.3%
EPS Q2Q%100%
EPS Next Y253.77%
EPS Next 2Y126.59%
EPS Next 3Y74.59%
EPS Next 5YN/A
Revenue 1Y (TTM)32.69%
Revenue growth 3Y9.92%
Revenue growth 5Y14.94%
Sales Q2Q%27.5%
Revenue Next Year3.83%
Revenue Next 2Y10.63%
Revenue Next 3Y11.36%
Revenue Next 5YN/A
EBIT growth 1Y977.66%
EBIT growth 3Y-12.47%
EBIT growth 5Y-17.98%
EBIT Next Year53.15%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y-201.26%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-201.26%
OCF growth 3YN/A
OCF growth 5YN/A