Head to Head Analysis: Redwood Trust (RWT) & Its Rivals

Redwood Trust (NYSE: RWT) is one of 38 public companies in the “Mortgage REITs” industry, but how does it weigh in compared to its competitors? We will compare Redwood Trust to related businesses based on the strength of its risk, institutional ownership, profitability, earnings, valuation, analyst recommendations and dividends.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Redwood Trust and its competitors, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Redwood Trust 0 0 0 0 N/A
Redwood Trust Competitors 111 839 842 31 2.43

As a group, “Mortgage REITs” companies have a potential upside of 2.70%. Given Redwood Trust’s competitors higher possible upside, analysts clearly believe Redwood Trust has less favorable growth aspects than its competitors.

Dividends

Redwood Trust pays an annual dividend of $1.12 per share and has a dividend yield of 6.8%. Redwood Trust pays out 64.0% of its earnings in the form of a dividend. As a group, “Mortgage REITs” companies pay a dividend yield of 10.1% and pay out 80.5% of their earnings in the form of a dividend.

Risk and Volatility

Redwood Trust has a beta of 0.87, indicating that its share price is 13% less volatile than the S&P 500. Comparatively, Redwood Trust’s competitors have a beta of 0.71, indicating that their average share price is 29% less volatile than the S&P 500.

Insider & Institutional Ownership

84.7% of Redwood Trust shares are held by institutional investors. Comparatively, 57.9% of shares of all “Mortgage REITs” companies are held by institutional investors. 2.3% of Redwood Trust shares are held by company insiders. Comparatively, 3.3% of shares of all “Mortgage REITs” companies are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Redwood Trust and its competitors top-line revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Redwood Trust $215.70 million N/A 9.44
Redwood Trust Competitors $626.30 million $243.53 million 1.51

Redwood Trust’s competitors have higher revenue and earnings than Redwood Trust. Redwood Trust is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Profitability

This table compares Redwood Trust and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Redwood Trust 46.04% 12.02% 2.50%
Redwood Trust Competitors 49.20% 10.70% 2.78%

Summary

Redwood Trust competitors beat Redwood Trust on 6 of the 11 factors compared.

Redwood Trust Company Profile

Redwood Trust, Inc., through its subsidiaries, focuses on investing in mortgage and other real estate related assets. The Company is engaged in mortgage banking activities. The Company operates through three segments: Residential Investments, Residential Mortgage Banking and Commercial. The Residential Investments segment includes a portfolio of investments in residential mortgage-backed securities (RMBS) retained from its Sequoia securitizations. The Residential Mortgage Banking segment consists of operating a mortgage loan conduit that acquires residential loans from third-party originators for subsequent sale, securitization, or transfer to its investment portfolio. Its Commercial segment consists of investments in multi-family securities and commercial mortgage-backed securities, as well as a remaining commercial loan investment following the sale of the remainder of its commercial mezzanine loan portfolio.

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