Redwood Trust, Inc. (NYSE:RWT) Stock Has Consensus Price Target of $5.25

Key Points

• Analysts rate Redwood Trust “Hold” overall: Seven analysts recommend buying, two rate it a hold, and two recommend selling. The consensus 12-month price target is $5.25, above the stock’s reported $2.92 price.
• Insiders have been buying shares: Executives and directors purchased 244,171 shares worth approximately $948,402 over the past 90 days, including significant purchases by President Dashiell Robinson and Director Greg Kubicek.
• The stock faces substantial financial risks despite its high dividend yield: Shares recently traded near their 12-month low, while the $0.72 annualized dividend implies a 24.6% yield and a highly negative payout ratio. Redwood Trust reported quarterly EPS of $0.25, slightly exceeding expectations, but revenue fell short of estimates.

Shares of Redwood Trust, Inc. (NYSE:RWT - Get Free Report) have been assigned a consensus recommendation of "Hold" from the eleven research firms that are covering the company, Marketbeat Ratings reports. Two investment analysts have rated the stock with a sell recommendation, two have given a hold recommendation and seven have issued a buy recommendation on the company. The average 12-month price objective among brokerages that have issued a report on the stock in the last year is $5.25.

A number of research firms have recently issued reports on RWT. Keefe, Bruyette & Woods dropped their price target on Redwood Trust from $5.50 to $4.75 and set an "outperform" rating on the stock in a research note on Monday, September 14th. Wells Fargo & Company cut their price objective on Redwood Trust from $7.00 to $6.00 and set an "equal weight" rating for the company in a report on Wednesday, July 29th. UBS Group reduced their price objective on Redwood Trust from $7.00 to $6.50 and set a "buy" rating for the company in a research report on Friday, August 21st. Citizens Jmp lowered their target price on Redwood Trust from $6.00 to $4.00 and set a "market outperform" rating on the stock in a report on Thursday, October 15th. Finally, Zacks Research downgraded Redwood Trust from a "hold" rating to a "strong sell" rating in a report on Wednesday, October 14th.

Insider Buying and Selling at Redwood Trust

In other Redwood Trust news, President Dashiell Robinson purchased 63,211 shares of Redwood Trust stock in a transaction dated Wednesday, September 16th. The stock was purchased at an average price of $3.98 per share, with a total value of $251,579.78. Following the transaction, the president directly owned 395,050 shares of the company's stock, valued at $1,572,299. This trade represents a 19.05% increase in their ownership of the stock. The purchase was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this link. Also, Director Greg Kubicek acquired 50,000 shares of the stock in a transaction dated Tuesday, September 15th. The stock was acquired at an average price of $3.85 per share, for a total transaction of $192,500.00. Following the purchase, the director directly owned 127,185 shares in the company, valued at approximately $489,662.25. This trade represents a 64.78% increase in their ownership of the stock. Additional details regarding this purchase are available in the official SEC disclosure. Insiders bought 244,171 shares of company stock worth $948,402 over the last 90 days. 3.30% of the stock is owned by company insiders.

Institutional Trading of Redwood Trust

Hedge funds and other institutional investors have recently added to or reduced their stakes in the business. Janney Montgomery Scott LLC grew its holdings in shares of Redwood Trust by 18.5% during the first quarter. Janney Montgomery Scott LLC now owns 15,113 shares of the real estate investment trust's stock valued at $85,000 after buying an additional 2,363 shares during the last quarter. Bank of New York Mellon Corp increased its position in shares of Redwood Trust by 0.4% in the 2nd quarter. Bank of New York Mellon Corp now owns 714,220 shares of the real estate investment trust's stock valued at $3,385,000 after acquiring an additional 2,627 shares during the period. Amundi raised its stake in Redwood Trust by 35.3% in the 1st quarter. Amundi now owns 18,584 shares of the real estate investment trust's stock worth $104,000 after acquiring an additional 4,847 shares during the last quarter. PNC Financial Services Group Inc. raised its stake in Redwood Trust by 41.5% in the 1st quarter. PNC Financial Services Group Inc. now owns 21,311 shares of the real estate investment trust's stock worth $120,000 after acquiring an additional 6,249 shares during the last quarter. Finally, WINTON GROUP Ltd raised its stake in Redwood Trust by 10.8% in the 2nd quarter. WINTON GROUP Ltd now owns 76,700 shares of the real estate investment trust's stock worth $364,000 after acquiring an additional 7,500 shares during the last quarter. 74.34% of the stock is owned by hedge funds and other institutional investors.

Redwood Trust Trading Down 3.8%

Shares of RWT stock opened at $2.92 on Tuesday. Redwood Trust has a 12-month low of $2.88 and a 12-month 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 firm's 50 day moving average is $4.03 and its 200 day moving average is $4.81. The stock has a market capitalization of $367.41 million, a P/E ratio of -73.11 and a beta of 1.45.

Redwood Trust (NYSE:RWT - Get Free Report) last posted its earnings results on Tuesday, July 28th. The real estate investment trust reported $0.25 EPS for the quarter, topping analysts' consensus estimates of $0.23 by $0.02. The business had revenue of $56.01 million during the quarter, compared to the consensus estimate of $89.45 million. Redwood Trust had a net margin of 0.42% and a return on equity of 16.02%. Research analysts expect that Redwood Trust will post 1.01 earnings per share for the current year.

Redwood Trust Dividend Announcement

The company also recently declared a quarterly dividend, which was paid on Wednesday, September 30th. Shareholders of record on Wednesday, September 23rd were paid a dividend of $0.18 per share. This represents a $0.72 dividend on an annualized basis and a dividend yield of 24.6%. The ex-dividend date was Wednesday, September 23rd. Redwood Trust's payout ratio is currently -1,800.00%.

About Redwood Trust

Redwood Trust, Inc NYSE: RWT is a specialty finance company focused on housing credit and residential real estate finance. Organized as a real estate investment trust, the company invests in and manages residential credit assets, including mortgage loans and mortgage-related securities, with an emphasis on assets that are not typically financed through traditional government-sponsored mortgage programs.

Redwood operates through several business platforms. Its residential mortgage banking activities include acquiring and financing prime jumbo loans and other residential mortgages, which may be held for investment or placed into private-label securitizations.

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