Redwood Trust (NYSE:RWT) Issues Quarterly Earnings Results

Redwood Trust (NYSE:RWT) released its earnings results on Tuesday. The real estate investment trust reported $0.25 earnings per share for the quarter, topping the consensus estimate of $0.23 by $0.02, Zacks reports. Redwood Trust had a return on equity of 15.73% and a net margin of 0.56%.The firm had revenue of $78.50 million during the quarter, compared to analysts’ expectations of $89.45 million.

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

• Mortgage banking remained strong, with volume exceeding $8 billion for the second consecutive quarter and mortgage banking returns above 20% for the eighth straight quarter. Management also reported improving efficiency, with direct expenses falling to 64 basis points of volume in the first half of 2026, aided increasingly by AI automation.
• Aspire achieved record second-quarter lock volume of $2.1 billion, up 31% sequentially, while gain-on-sale margins improved to 101 basis points. Redwood also signed an Aspire joint venture with Crayhill that could provide up to $8 billion of loan purchasing capacity.
• Redwood continued reducing its legacy investments portfolio, which fell to 12% of capital from 15% in the prior quarter and 63% year over year. Management expects the segment to fall below 5% of capital by year-end, potentially improving returns as capital is redeployed into mortgage banking or used for share repurchases.
• Redwood reported a $3 million GAAP net loss, or $0.03 per share, and earnings available for distribution declined to $0.15 per share from $0.21 in the first quarter. Book value per share fell 3% to $6.90, primarily because of mark-to-market losses and carrying costs in the legacy portfolio.
• Higher mortgage rates, low home-sale activity and aggressive bank competition remain risks to production and gain-on-sale margins. CoreVest volume declined 5% sequentially, while management said future results will depend on remaining responsive to rate volatility and avoiding uneconomic volume growth.

Redwood Trust Trading Down 0.7%

Shares of Redwood Trust stock traded down $0.04 during trading on Thursday, hitting $4.64. The company’s stock had a trading volume of 1,278,522 shares, compared to its average volume of 1,943,719. The company has a debt-to-equity ratio of 29.41, a current ratio of 59.63 and a quick ratio of 59.63. Redwood Trust has a 52 week low of $4.19 and a 52 week high of $6.97. The stock has a market cap of $581.65 million, a price-to-earnings ratio of -116.00 and a beta of 1.37. The stock has a 50-day moving average price of $5.04 and a two-hundred day moving average price of $5.51.

Redwood Trust Announces Dividend

The firm also recently disclosed a quarterly dividend, which was paid on Tuesday, June 30th. Investors of record on Tuesday, June 23rd were paid a $0.18 dividend. The ex-dividend date of this dividend was Tuesday, June 23rd. This represents a $0.72 annualized dividend and a dividend yield of 15.5%. Redwood Trust’s payout ratio is currently -92.31%.

Analyst Upgrades and Downgrades

Several analysts recently weighed in on RWT shares. Citizens Jmp reduced their price objective on Redwood Trust from $7.00 to $6.00 and set a “market outperform” rating on the stock in a research note on Wednesday, July 8th. BTIG Research restated a “buy” rating and issued a $6.00 price target on shares of Redwood Trust in a research note on Tuesday. JonesTrading decreased their price target on shares of Redwood Trust from $6.25 to $6.00 and set a “buy” rating on the stock in a report on Tuesday. Wells Fargo & Company lowered their price objective on shares of Redwood Trust from $7.00 to $6.00 and set an “equal weight” rating for the company in a research report on Wednesday. Finally, Piper Sandler dropped their price objective on shares of Redwood Trust from $6.50 to $5.50 and set a “neutral” rating for the company in a research note on Thursday, July 2nd. Six analysts have rated the stock with a Buy rating, three have assigned a Hold rating and two have issued a Sell rating to the company’s stock. According to MarketBeat.com, Redwood Trust currently has a consensus rating of “Hold” and an average target price of $6.00.

Institutional Inflows and Outflows

Several hedge funds and other institutional investors have recently bought and sold shares of the stock. Russell Investments Group Ltd. increased its stake in shares of Redwood Trust by 331.8% in the second quarter. Russell Investments Group Ltd. now owns 7,915 shares of the real estate investment trust’s stock valued at $47,000 after buying an additional 6,082 shares during the period. Abel Hall LLC acquired a new stake in Redwood Trust during the 4th quarter worth about $58,000. TMB Capital Partners LLC bought a new position in shares of Redwood Trust in the 4th quarter worth about $64,000. Verition Fund Management LLC acquired a new position in shares of Redwood Trust in the 3rd quarter valued at about $64,000. Finally, Tower Research Capital LLC TRC boosted its position in shares of Redwood Trust by 136.9% during the 2nd quarter. Tower Research Capital LLC TRC now owns 10,823 shares of the real estate investment trust’s stock valued at $64,000 after purchasing an additional 6,255 shares in the last quarter. 74.34% of the stock is owned by institutional investors and hedge funds.

About Redwood Trust

Redwood Trust, Inc (NYSE:RWT) is a publicly traded real estate investment trust specializing in the U.S. residential mortgage market. Headquartered in Mill Valley, California, the company focuses on investing in a diversified portfolio of residential mortgage assets, including whole loans, agency and non-agency mortgage-backed securities, and structured credit products.

The company’s core activities encompass the acquisition, financing, and management of prime residential mortgage whole loans and mortgage-backed securities.