Redwood Trust (NYSE:RWT) Shares Gap Down - Should You Sell?

Key Points

• Shares of Redwood Trust gapped down, opening at $5.24 after a $5.49 close and last trading around $5.28 on volume of about 308,553 shares.
• Analysts are mostly constructive — MarketBeat shows a consensus of "Moderate Buy" with an average target of $6.96, and several firms (including JPMorgan and Keefe, Bruyette & Woods) recently raised ratings or targets.
• The company declared a $0.18 quarterly dividend (annualized $0.72) implying a 13.6% yield

Redwood Trust, Inc. (NYSE:RWT - Get Free Report) shares gapped down before the market opened on Tuesday . The stock had previously closed at $5.49, but opened at $5.24. Redwood Trust shares last traded at $5.2750, with a volume of 308,553 shares trading hands.

Analyst Ratings Changes

Several research analysts have weighed in on RWT shares. Zacks Research raised Redwood Trust from a "hold" rating to a "strong-buy" rating in a research report on Monday, January 26th. Citigroup reiterated a "market perform" rating on shares of Redwood Trust in a report on Wednesday, February 18th. JonesTrading restated a "buy" rating and issued a $6.25 price objective on shares of Redwood Trust in a report on Tuesday, March 3rd. JPMorgan Chase & Co. raised shares of Redwood Trust from a "neutral" rating to an "overweight" rating and set a $6.00 price objective on the stock in a research report on Friday, January 23rd. Finally, Keefe, Bruyette & Woods lifted their target price on shares of Redwood Trust from $5.75 to $7.00 and gave the company a "market perform" rating in a research note on Wednesday, February 18th. One equities research analyst has rated the stock with a Strong Buy rating, five have assigned a Buy rating, two have issued a Hold rating and one has issued a Sell rating to the company. According to MarketBeat, the stock has an average rating of "Moderate Buy" and an average target price of $6.96.

Redwood Trust Trading Down 3.6%

The company has a market capitalization of $661.82 million, a P/E ratio of -8.68 and a beta of 1.55. The company has a 50-day simple moving average of $5.90 and a 200 day simple moving average of $5.71. The company has a debt-to-equity ratio of 24.34, a quick ratio of 55.15 and a current ratio of 55.15.

Redwood Trust (NYSE:RWT - Get Free Report) last posted its quarterly earnings data on Wednesday, February 11th. The real estate investment trust reported $0.20 earnings per share for the quarter, missing the consensus estimate of $0.22 by ($0.02). The business had revenue of $140.33 million during the quarter, compared to the consensus estimate of $24.88 million. Redwood Trust had a negative net margin of 5.93% and a positive return on equity of 12.00%. Sell-side analysts expect that Redwood Trust, Inc. will post 0.78 earnings per share for the current year.

Redwood Trust Announces Dividend

The business also recently declared a quarterly dividend, which will be paid on Tuesday, March 31st. Shareholders of record on Tuesday, March 24th will be issued a $0.18 dividend. The ex-dividend date of this dividend is Tuesday, March 24th. This represents a $0.72 dividend on an annualized basis and a yield of 13.6%. Redwood Trust's dividend payout ratio is -118.03%.

Institutional Inflows and Outflows

Several institutional investors and hedge funds have recently made changes to their positions in the stock. Corient Private Wealth LLC raised its position in shares of Redwood Trust by 74.5% during the fourth quarter. Corient Private Wealth LLC now owns 19,658 shares of the real estate investment trust's stock valued at $109,000 after buying an additional 8,390 shares during the last quarter. TMB Capital Partners LLC acquired a new stake in Redwood Trust during the fourth quarter worth about $64,000. Invesco Ltd. increased its stake in Redwood Trust by 25.4% during the fourth quarter. Invesco Ltd. now owns 2,551,067 shares of the real estate investment trust's stock valued at $14,107,000 after acquiring an additional 516,630 shares during the period. Mercer Global Advisors Inc. ADV raised its holdings in Redwood Trust by 40.9% in the 4th quarter. Mercer Global Advisors Inc. ADV now owns 21,625 shares of the real estate investment trust's stock valued at $120,000 after acquiring an additional 6,281 shares in the last quarter. Finally, Vident Advisory LLC raised its holdings in Redwood Trust by 4.7% in the 4th quarter. Vident Advisory LLC now owns 39,606 shares of the real estate investment trust's stock valued at $219,000 after acquiring an additional 1,773 shares in the last quarter. Institutional investors own 74.34% of the company's stock.

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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