Redwood Trust (NYSE:RWT) Trading Down 7.3% After Earnings Miss

Key Points

• Redwood Trust's stocks fell 7.3%, trading at $5.63, a decline that is reflected by the reduced average trading volume.
• Research analysts have mixed opinions, with firms adjusting their price targets; JMP Securities lowered theirs from $8.00 to $7.50, while UBS Group increased theirs from $6.50 to $7.00.
• The company recently declared a $0.18 quarterly dividend, resulting in an annual yield of 12.82%, although its payout ratio stands at 327.27%.

Redwood Trust, Inc. (NYSE:RWT - Get Free Report)'s share price dropped 7.3% on Wednesday following a dissappointing earnings announcement. The stock traded as low as $5.62 and last traded at $5.63. Approximately 938,604 shares were traded during trading, a decline of 2% from the average daily volume of 960,203 shares. The stock had previously closed at $6.07.

The real estate investment trust reported $0.18 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.19 by ($0.01). The business had revenue of ($38.10) million during the quarter, compared to analyst estimates of $31.00 million. Redwood Trust had a negative net margin of 9.26% and a positive return on equity of 8.57%.

Redwood Trust Dividend Announcement

The business also recently declared a quarterly dividend, which was paid on Monday, June 30th. Investors of record on Monday, June 23rd were paid a $0.18 dividend. The ex-dividend date was Monday, June 23rd. This represents a $0.72 dividend on an annualized basis and a yield of 13.2%. Redwood Trust's dividend payout ratio is -112.50%.

Wall Street Analysts Forecast Growth

A number of research firms have issued reports on RWT. Keefe, Bruyette & Woods downgraded shares of Redwood Trust from an "outperform" rating to a "market perform" rating and cut their price objective for the company from $7.00 to $6.50 in a report on Thursday, July 10th. Jones Trading reaffirmed a "buy" rating and set a $7.00 price target on shares of Redwood Trust in a report on Friday, May 2nd. UBS Group lowered their price objective on shares of Redwood Trust from $7.00 to $6.50 and set a "buy" rating for the company in a research report on Thursday. JPMorgan Chase & Co. raised their price target on shares of Redwood Trust from $5.50 to $6.00 and gave the company a "neutral" rating in a research note on Thursday, May 1st. Finally, Wall Street Zen downgraded shares of Redwood Trust from a "hold" rating to a "strong sell" rating in a research note on Saturday. One investment analyst has rated the stock with a sell rating, four have assigned a hold rating, three have assigned a buy rating and one has issued a strong buy rating to the company. According to MarketBeat, the stock presently has an average rating of "Hold" and an average target price of $7.31.

Institutional Investors Weigh In On Redwood Trust

A number of large investors have recently bought and sold shares of RWT. Nisa Investment Advisors LLC lifted its stake in shares of Redwood Trust by 14.4% in the second quarter. Nisa Investment Advisors LLC now owns 89,960 shares of the real estate investment trust's stock valued at $532,000 after buying an additional 11,353 shares in the last quarter. Prudent Man Advisors LLC lifted its position in shares of Redwood Trust by 26.7% during the second quarter. Prudent Man Advisors LLC now owns 28,369 shares of the real estate investment trust's stock valued at $168,000 after purchasing an additional 5,987 shares in the last quarter. Brighton Jones LLC raised its position in Redwood Trust by 50.4% in the second quarter. Brighton Jones LLC now owns 112,617 shares of the real estate investment trust's stock worth $666,000 after acquiring an additional 37,760 shares during the period. CWM LLC raised its position in Redwood Trust by 270.5% in the second quarter. CWM LLC now owns 6,168 shares of the real estate investment trust's stock worth $36,000 after acquiring an additional 4,503 shares during the period. Finally, Concurrent Investment Advisors LLC raised its position in Redwood Trust by 4.7% in the second quarter. Concurrent Investment Advisors LLC now owns 41,474 shares of the real estate investment trust's stock worth $245,000 after acquiring an additional 1,866 shares during the period. 74.34% of the stock is currently owned by institutional investors and hedge funds.

Redwood Trust Stock Performance

The firm has a market cap of $726.84 million, a P/E ratio of -8.53 and a beta of 1.31. The company has a quick ratio of 39.35, a current ratio of 39.35 and a debt-to-equity ratio of 18.74. The firm's 50-day simple moving average is $5.80 and its 200 day simple moving average is $5.99.

Redwood Trust Company Profile

Redwood Trust, Inc, together with its subsidiaries, operates as a specialty finance company in the United States. The company operates through three segments: Residential Consumer Mortgage Banking, Residential Investor Mortgage Banking, and Investment Portfolio. The Residential Consumer Mortgage Banking segment operates a mortgage loan conduit that acquires residential loans from third-party originators for subsequent sale, securitization, or transfer to its investment portfolio.