Redwood Trust (NYSE:RWT) Posts Earnings Results, Misses Expectations By $0.23 EPS

Redwood Trust (NYSE:RWT) announced its quarterly earnings results on Tuesday. The real estate investment trust reported ($0.02) EPS for the quarter, missing analysts’ consensus estimates of $0.21 by ($0.23), FiscalAI reports. Redwood Trust had a return on equity of 16.02% and a net margin of 0.42%. The company had revenue of $12.90 million during the quarter, compared to the consensus estimate of $85.52 million.

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

• Positive Sentiment: Redwood plans to transition from a REIT to a taxable C-corporation in 2027, unlocking approximately $85 million–$90 million of deferred tax assets and increasing fourth-quarter 2026 GAAP book value by an estimated $0.73–$0.77 per share, or about 11%.
• Negative Sentiment: The company will reduce its quarterly common dividend from $0.18 to $0.02 beginning with the fourth-quarter dividend, lowering annual common dividend payments by roughly $75 million at the current share count. Redwood plans to offer a higher-yielding preferred stock exchange as an alternative for income-focused shareholders.
• Positive Sentiment: Mortgage banking generated a 26% annualized non-GAAP return on capital, with Sequoia delivering a 41% return and the company recording its ninth consecutive quarter of mortgage banking returns above 20%. Management also cited low delinquencies and improving joint-venture activity as support for future growth.
• Negative Sentiment: Third-quarter results deteriorated, with a $47 million GAAP loss attributable to common shareholders, book value down 4.9% to $6.56 per share, and consolidated non-GAAP EAD of negative $0.02 per share. Legacy investments reduced EAD by $0.20 per share, while Aspire posted a $5 million loss amid lower volumes and spread widening.
• Neutral Sentiment: Redwood is accelerating the wind-down of its legacy portfolio, having reduced exposure by nearly 40% since the third quarter of 2025 and evaluating offers on about 70% of remaining loans. Further markdowns or transaction costs are possible, although management expects carrying costs to decline as the portfolio shrinks.

Redwood Trust Stock Performance

NYSE RWT traded down $0.14 during trading hours on Tuesday, hitting $3.10. 3,153,655 shares of the company’s stock traded hands, compared to its average volume of 2,633,738. The business’s fifty day moving average price is $3.71 and its two-hundred day moving average price is $4.99. 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 has a market capitalization of $388.76 million, a P/E ratio of -77.36 and a beta of 1.45. Redwood Trust has a 52 week low of $2.88 and a 52 week high of $6.97.

Redwood Trust Dividend Announcement

The firm also recently disclosed a quarterly dividend, which was paid on Wednesday, September 30th. Investors of record on Wednesday, September 23rd were issued a $0.18 dividend. The ex-dividend date of this dividend was Wednesday, September 23rd. This represents a $0.72 dividend on an annualized basis and a dividend yield of 23.3%. Redwood Trust’s dividend payout ratio (DPR) is presently -1,800.00%.

Wall Street Analysts Forecast Growth

Several equities research analysts recently issued reports on RWT shares. Citigroup restated a “market outperform” rating on shares of Redwood Trust in a report on Thursday, October 15th. Wells Fargo & Company decreased their target price on shares of Redwood Trust from $7.00 to $6.00 and set an “equal weight” rating for the company in a research note on Wednesday, July 29th. Weiss Ratings reissued a “sell (d)” rating on shares of Redwood Trust in a report on Monday, September 21st. UBS Group lowered their price target on Redwood Trust from $7.00 to $6.50 and set a “buy” rating on the stock in a report on Friday, August 21st. Finally, JPMorgan Chase & Co. dropped their price target on Redwood Trust from $6.50 to $6.00 and set an “overweight” rating on the stock in a research note on Friday, July 17th. Seven analysts have rated the stock with a Buy rating, two have assigned a Hold rating and two have given a Sell rating to the stock. Based on data from MarketBeat, Redwood Trust presently has a consensus rating of “Hold” and a consensus price target of $5.25.

Insider Buying and Selling at Redwood Trust

In other Redwood Trust news, President Dashiell I. Robinson acquired 63,211 shares of the business’s 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 in the company, valued at approximately $1,572,299. The trade was a 19.05% increase in their position. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this link. Also, Director Greg H. Kubicek acquired 50,000 shares of the business’s stock in a transaction dated Tuesday, September 15th. The shares were acquired at an average cost of $3.85 per share, with a total value of $192,500.00. Following the transaction, the director 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. The disclosure for this purchase is available in the SEC filing. Insiders acquired a total of 244,171 shares of company stock valued at $948,402 in the last ninety days. Corporate insiders own 3.30% of the company’s stock.

Redwood Trust Company Profile

Redwood Trust, Inc is a specialty finance company and real estate investment trust headquartered in Mill Valley, California. Founded in 1994 and traded on the New York Stock Exchange under the symbol RWT, the company focuses on investing in and financing residential real estate credit.

Redwood Trust’s activities include acquiring, originating, securitizing and managing residential mortgage loans and related assets. Its portfolio has historically included jumbo and other non-agency residential mortgages, mortgage-backed securities, mortgage servicing rights and other residential credit investments.