Redwood Trust (NYSE:RWT) Reaches New 52-Week Low - Time to Sell?

Key Points

• Redwood Trust shares hit a new 52-week low, falling 15.5% intraday to $3.22 before recovering to $3.60, with unusually heavy trading volume.
• Analyst sentiment is mixed: the stock has an average “Hold” rating and a $5.94 price target, while some firms maintain Buy/Outperform ratings and others issue Sell or Strong Sell recommendations.
• The REIT beat quarterly EPS expectations but missed revenue forecasts; it also declared a $0.18 quarterly dividend, implying a roughly 20% yield, though its extremely high negative payout ratio highlights potential dividend sustainability concerns.

Redwood Trust, Inc. (NYSE:RWT - Get Free Report)'s stock price reached a new 52-week low during mid-day trading on Thursday . The stock traded as low as $3.22 and last traded at $3.60, with a volume of 42842443 shares. The stock had previously closed at $4.26.

Analysts Set New Price Targets

Several equities research analysts have commented on the stock. Weiss Ratings restated a "sell (d)" rating on shares of Redwood Trust in a research report on Wednesday, June 24th. JPMorgan Chase & Co. cut their price target on shares of Redwood Trust from $6.50 to $6.00 and set an "overweight" rating for the company in a report on Friday, July 17th. Keefe, Bruyette & Woods decreased their price objective on shares of Redwood Trust from $6.00 to $5.50 and set an "outperform" rating on the stock in a report on Wednesday, July 29th. BTIG Research restated a "buy" rating and set a $6.00 target price on shares of Redwood Trust in a research report on Tuesday, July 28th. Finally, Zacks Research cut shares of Redwood Trust from a "hold" rating to a "strong sell" rating in a report on Tuesday, July 21st. Six equities research analysts have rated the stock with a Buy rating, three have given a Hold rating and two have given a Sell rating to the stock. According to MarketBeat, the stock currently has an average rating of "Hold" and an average target price of $5.94.

Redwood Trust Trading Down 15.5%

The firm has a market cap of $452.20 million, a PE ratio of -89.98 and a beta of 1.37. The company has a debt-to-equity ratio of 31.69, a current ratio of 67.49 and a quick ratio of 67.49. The business has a 50-day moving average price of $4.72 and a two-hundred day moving average price of $5.23.

Redwood Trust (NYSE:RWT - Get Free Report) last issued its quarterly earnings data on Tuesday, July 28th. The real estate investment trust reported $0.25 EPS for the quarter, beating analysts' consensus estimates of $0.23 by $0.02. Redwood Trust had a net margin of 0.42% and a return on equity of 16.02%. The firm had revenue of $56.01 million for the quarter, compared to analysts' expectations of $89.45 million. Analysts forecast that Redwood Trust, Inc. will post 1.03 EPS for the current year.

Redwood Trust Dividend Announcement

The firm also recently declared a quarterly dividend, which will be paid on Wednesday, September 30th. Stockholders of record on Wednesday, September 23rd will be given a $0.18 dividend. The ex-dividend date is Wednesday, September 23rd. This represents a $0.72 annualized dividend and a dividend yield of 20.0%. Redwood Trust's dividend payout ratio is currently -1,800.00%.

Institutional Inflows and Outflows

Institutional investors have recently modified their holdings of the stock. WINTON GROUP Ltd grew its holdings in Redwood Trust by 10.8% during the 2nd quarter. WINTON GROUP Ltd now owns 76,700 shares of the real estate investment trust's stock valued at $364,000 after buying an additional 7,500 shares during the last quarter. Engineers Gate Manager LP raised its holdings in shares of Redwood Trust by 33.5% in the second quarter. Engineers Gate Manager LP now owns 45,400 shares of the real estate investment trust's stock worth $215,000 after acquiring an additional 11,400 shares during the last quarter. Squarepoint Ops LLC purchased a new stake in shares of Redwood Trust in the second quarter valued at $157,000. VIRGINIA RETIREMENT SYSTEMS ET Al acquired a new stake in shares of Redwood Trust during the second quarter valued at $990,000. Finally, California State Teachers Retirement System boosted its stake in shares of Redwood Trust by 518.9% during the second quarter. California State Teachers Retirement System now owns 757,589 shares of the real estate investment trust's stock valued at $3,591,000 after acquiring an additional 635,187 shares during the last quarter. 74.34% of the stock is currently 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.

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