Redwood Trust (NYSE:RWT) Releases Quarterly Earnings Results, Misses Expectations By $0.01 EPS

Key Points

• Redwood Trust missed EPS expectations, reporting $0.21 vs. $0.22 consensus and revenue of $63.9M vs. $89.5M, with a GAAP net loss of $7M while non‑GAAP EAD of $0.21 covered the dividend; the company pays a quarterly $0.18 dividend (annualized yield 12.9%).
• Management announced a Sequoia partnership with Castlelake that provides roughly $8 billion of incremental purchasing power and a Sequoia JV expected to contribute about $0.12–$0.15 of annual earnings as it ramps.
• Operationally the firm posted a third consecutive record quarter—mortgage banking volume topped $8.5 billion with a company‑record 11 securitizations—and highlighted AI/automation (2,500+ workflows) that cut cost per loan to ~18 bps, supporting scalable margin expansion.

Redwood Trust (NYSE:RWT - Get Free Report) released its earnings results on Wednesday. The real estate investment trust reported $0.21 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.22 by ($0.01), FiscalAI reports. The company had revenue of $63.90 million for the quarter, compared to analyst estimates of $89.54 million. Redwood Trust had a positive return on equity of 12.00% and a negative net margin of 5.93%.

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

• Redwood reported a third consecutive record operating quarter with mortgage banking volume topping $8.5 billion, EAD of $0.21 per share that covered the dividend, and a company-record 11 securitizations completed in Q1.
• Management announced a major Sequoia capital partnership with Castlelake providing roughly $8 billion of incremental purchasing power and a Sequoia JV expected to contribute approximately $0.12–$0.15 of incremental annual earnings as it ramps over the next year.
• Executives highlighted material operating efficiency gains from AI and automation (over 2,500 agentic workflows in Q1), with cost per loan improving to about 18 bps and very high capital turnover that supports scalable margin expansion.
• Financials were mixed: a GAAP net loss of $7 million (driven by marks and one-time items) versus non‑GAAP EAD of $0.21 per share, book value of $7.12 (down 3%), while legacy exposure fell to 15% of capital and management expects the legacy drag to continue moderating; liquidity remained solid with $202 million cash and ~$3.9 billion excess warehouse capacity.
• Aspire and CoreVest showed platform progress: Aspire locked about $1.6 billion in Q1 (estimated ~4% market share, targeted to at least double H2) and CoreVest continues repositioning with CPP JV distributions >$2 billion and restructuring steps intended to drive profitability in 2026.

Redwood Trust Trading Down 2.7%

Shares of RWT stock traded down $0.16 during mid-day trading on Wednesday, reaching $5.60. 1,517,331 shares of the stock traded hands, compared to its average volume of 1,589,274. The stock's fifty day simple moving average is $5.82 and its two-hundred day simple moving average is $5.67. Redwood Trust has a 1-year low of $5.00 and a 1-year high of $6.97. The company has a market cap of $699.35 million, a price-to-earnings ratio of -9.17 and a beta of 1.52. The company has a quick ratio of 55.15, a current ratio of 55.15 and a debt-to-equity ratio of 24.34.

Redwood Trust Dividend Announcement

The company also recently declared a quarterly dividend, which was paid on Tuesday, March 31st. Stockholders of record on Tuesday, March 24th were paid a dividend of $0.18 per share. This represents a $0.72 dividend on an annualized basis and a dividend yield of 12.9%. The ex-dividend date of this dividend was Tuesday, March 24th. Redwood Trust's dividend payout ratio (DPR) is presently -118.03%.

Hedge Funds Weigh In On Redwood Trust

A number of hedge funds have recently made changes to their positions in RWT. Russell Investments Group Ltd. raised its position in shares of Redwood Trust by 331.8% during the second quarter. Russell Investments Group Ltd. now owns 7,915 shares of the real estate investment trust's stock worth $47,000 after acquiring an additional 6,082 shares during the last quarter. Abel Hall LLC bought a new position in shares of Redwood Trust during the fourth quarter worth about $58,000. TMB Capital Partners LLC bought a new stake in Redwood Trust in the fourth quarter worth approximately $64,000. Verition Fund Management LLC bought a new stake in Redwood Trust in the third quarter worth approximately $64,000. Finally, Tower Research Capital LLC TRC increased its holdings in Redwood Trust by 136.9% in the second quarter. Tower Research Capital LLC TRC now owns 10,823 shares of the real estate investment trust's stock worth $64,000 after purchasing an additional 6,255 shares in the last quarter. 74.34% of the stock is currently owned by institutional investors.

Wall Street Analyst Weigh In

Several analysts recently weighed in on RWT shares. Keefe, Bruyette & Woods raised their price objective on Redwood Trust from $5.75 to $7.00 and gave the company a "market perform" rating in a research note on Wednesday, February 18th. JonesTrading reaffirmed a "buy" rating and issued a $6.25 price objective on shares of Redwood Trust in a research note on Tuesday, March 3rd. Wall Street Zen lowered Redwood Trust from a "hold" rating to a "sell" rating in a research note on Monday, April 6th. Piper Sandler reduced their price objective on Redwood Trust from $6.50 to $6.00 and set a "neutral" rating on the stock in a research note on Thursday, April 2nd. Finally, Weiss Ratings reissued a "sell (d)" rating on shares of Redwood Trust in a research note on Thursday, January 22nd. Five equities research analysts have rated the stock with a Buy rating, four have given a Hold rating and one has given a Sell rating to the company. Based on data from MarketBeat.com, the company has a consensus rating of "Hold" and a consensus target price of $6.82.

Redwood Trust Company Profile

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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