Redwood Trust (NYSE:RWT) Issues Quarterly Earnings Results

Redwood Trust (NYSE:RWT) released its earnings results on Tuesday. The real estate investment trust reported $0.18 earnings per share for the quarter, missing analysts’ consensus estimates of $0.21 by ($0.03), Zacks reports. Redwood Trust had a net margin of 0.42% and a return on equity of 16.00%. The company had revenue of $12.90 million during the quarter, compared to analysts’ expectations of $85.52 million.

Here are the key takeaways from Redwood Trust’s conference call:

• Positive Sentiment: Redwood plans to transition from a REIT to a taxable C-corporation in 2027, unlocking approximately $85 million–$90 million of deferred tax assets and increasing fourth-quarter 2026 GAAP book value by an estimated $0.73–$0.77 per share, or about 11%.
• Negative Sentiment: The company will reduce its quarterly common dividend from $0.18 to $0.02 beginning with the fourth-quarter dividend, lowering annual common dividend payments by roughly $75 million at the current share count. Redwood plans to offer a higher-yielding preferred stock exchange as an alternative for income-focused shareholders.
• Positive Sentiment: Mortgage banking generated a 26% annualized non-GAAP return on capital, with Sequoia delivering a 41% return and the company recording its ninth consecutive quarter of mortgage banking returns above 20%. Management also cited low delinquencies and improving joint-venture activity as support for future growth.
• Negative Sentiment: Third-quarter results deteriorated, with a $47 million GAAP loss attributable to common shareholders, book value down 4.9% to $6.56 per share, and consolidated non-GAAP EAD of negative $0.02 per share. Legacy investments reduced EAD by $0.20 per share, while Aspire posted a $5 million loss amid lower volumes and spread widening.
• Neutral Sentiment: Redwood is accelerating the wind-down of its legacy portfolio, having reduced exposure by nearly 40% since the third quarter of 2025 and evaluating offers on about 70% of remaining loans. Further markdowns or transaction costs are possible, although management expects carrying costs to decline as the portfolio shrinks.

Redwood Trust Stock Performance

Shares of NYSE RWT traded down $0.20 during mid-day trading on Thursday, hitting $3.06. The company had a trading volume of 2,274,173 shares, compared to its average volume of 2,659,085. The company has a market capitalization of $383.74 million, a price-to-earnings ratio of -8.99 and a beta of 1.49. Redwood Trust has a 1 year low of $2.69 and a 1 year high of $6.97. The company has a current ratio of 67.49, a quick ratio of 67.49 and a debt-to-equity ratio of 31.69. The stock’s 50-day moving average price is $3.65 and its 200-day moving average price is $4.96.

Redwood Trust Announces Dividend

The business also recently declared a quarterly dividend, which was paid on Wednesday, September 30th. Stockholders of record on Wednesday, September 23rd were issued a $0.18 dividend. This represents a $0.72 dividend on an annualized basis and a dividend yield of 23.6%. The ex-dividend date of this dividend was Wednesday, September 23rd. Redwood Trust’s dividend payout ratio (DPR) is presently -211.76%.

Insider Buying and Selling

In related news, Director Greg H. Kubicek bought 50,000 shares of Redwood Trust stock in a transaction on Tuesday, September 15th. The stock was acquired at an average price of $3.85 per share, with a total value of $192,500.00. Following the acquisition, the director directly owned 127,185 shares of the company’s stock, valued at $489,662.25. This represents a 64.78% increase in their ownership of the stock. The acquisition was disclosed in a document filed with the Securities & Exchange Commission, which is available through this hyperlink. Also, CFO Brooke Carillo purchased 26,065 shares of the stock in a transaction dated Tuesday, September 15th. The stock was purchased at an average cost of $3.85 per share, for a total transaction of $100,350.25. Following the completion of the acquisition, the chief financial officer owned 140,481 shares of the company’s stock, valued at approximately $540,851.85. This represents a 22.78% increase in their position. The disclosure for this purchase is available in the SEC filing. In the last 90 days, insiders have purchased 244,171 shares of company stock valued at $948,402. 3.30% of the stock is owned by company insiders.

Wall Street Analysts Forecast Growth

A number of research firms recently commented on RWT. JPMorgan Chase & Co. lowered their price target on shares of Redwood Trust from $6.50 to $6.00 and set an “overweight” rating on the stock in a report on Friday, July 17th. Wells Fargo & Company reduced their price objective on Redwood Trust from $6.00 to $3.50 and set an “equal weight” rating for the company in a report on Wednesday. Zacks Research downgraded Redwood Trust from a “hold” rating to a “strong sell” rating in a research report on Wednesday, October 14th. UBS Group lowered their target price on Redwood Trust from $7.00 to $6.50 and set a “buy” rating on the stock in a research note on Friday, August 21st. Finally, Weiss Ratings restated a “sell (d)” rating on shares of Redwood Trust in a research note on Monday, September 21st. Seven equities research analysts have rated the stock with a Buy rating, two have given a Hold rating and two have issued a Sell rating to the company. Based on data from MarketBeat.com, the stock currently has an average rating of “Hold” and an average target price of $4.94.

Redwood Trust Company Profile

Redwood Trust, Inc is a specialty finance company and real estate investment trust headquartered in Mill Valley, California. Founded in 1994 and traded on the New York Stock Exchange under the symbol RWT, the company focuses on investing in and financing residential real estate credit.

Redwood Trust’s activities include acquiring, originating, securitizing and managing residential mortgage loans and related assets. Its portfolio has historically included jumbo and other non-agency residential mortgages, mortgage-backed securities, mortgage servicing rights and other residential credit investments.