Redwood Trust (NYSE:RWT) Issues Earnings Results, Beats Estimates By $0.02 EPS

Redwood Trust (NYSE:RWT) released 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, Zacks reports. The firm had revenue of $56.01 million for the quarter, compared to analysts’ expectations of $89.45 million. Redwood Trust had a return on equity of 16.02% and a net margin of 0.42%.

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

• Mortgage banking remained strong, with volume exceeding $8 billion for the second consecutive quarter and mortgage banking returns above 20% for the eighth straight quarter. Management also reported improving efficiency, with direct expenses falling to 64 basis points of volume in the first half of 2026, aided increasingly by AI automation.
• Aspire achieved record second-quarter lock volume of $2.1 billion, up 31% sequentially, while gain-on-sale margins improved to 101 basis points. Redwood also signed an Aspire joint venture with Crayhill that could provide up to $8 billion of loan purchasing capacity.
• Redwood continued reducing its legacy investments portfolio, which fell to 12% of capital from 15% in the prior quarter and 63% year over year. Management expects the segment to fall below 5% of capital by year-end, potentially improving returns as capital is redeployed into mortgage banking or used for share repurchases.
• Redwood reported a $3 million GAAP net loss, or $0.03 per share, and earnings available for distribution declined to $0.15 per share from $0.21 in the first quarter. Book value per share fell 3% to $6.90, primarily because of mark-to-market losses and carrying costs in the legacy portfolio.
• Higher mortgage rates, low home-sale activity and aggressive bank competition remain risks to production and gain-on-sale margins. CoreVest volume declined 5% sequentially, while management said future results will depend on remaining responsive to rate volatility and avoiding uneconomic volume growth.

Redwood Trust Stock Performance

Shares of RWT stock opened at $4.26 on Thursday. The company has a quick ratio of 67.49, a current ratio of 67.49 and a debt-to-equity ratio of 31.69. Redwood Trust has a 52 week low of $4.19 and a 52 week high of $6.97. The stock has a market capitalization of $535.10 million, a PE ratio of -106.47 and a beta of 1.37. The firm has a 50 day moving average of $4.74 and a two-hundred day moving average of $5.25.

Analyst Ratings Changes

RWT has been the topic of several recent analyst reports. Zacks Research lowered Redwood Trust from a “hold” rating to a “strong sell” rating in a research note on Tuesday, July 21st. Piper Sandler reduced their price objective on shares of Redwood Trust from $6.50 to $5.50 and set a “neutral” rating on the stock in a report on Thursday, July 2nd. UBS Group decreased their target price on shares of Redwood Trust from $7.00 to $6.50 and set a “buy” rating on the stock in a research report on Friday, August 21st. Weiss Ratings reaffirmed a “sell (d)” rating on shares of Redwood Trust in a research note on Wednesday, June 24th. Finally, JPMorgan Chase & Co. dropped their price target on shares of Redwood Trust from $6.50 to $6.00 and set an “overweight” rating for the company in a research report on Friday, July 17th. Six analysts have rated the stock with a Buy rating, three have assigned a Hold rating and two have issued a Sell rating to the company’s stock. Based on data from MarketBeat, Redwood Trust currently has an average rating of “Hold” and an average target price of $5.94.

Institutional Trading of Redwood Trust

A number of large investors have recently modified their holdings of the stock. Russell Investments Group Ltd. grew its stake in Redwood Trust by 331.8% during the 2nd quarter. Russell Investments Group Ltd. now owns 7,915 shares of the real estate investment trust’s stock worth $47,000 after purchasing an additional 6,082 shares in the last quarter. Abel Hall LLC purchased a new position in shares of Redwood Trust in the 4th quarter valued at about $58,000. TMB Capital Partners LLC purchased a new position in shares of Redwood Trust in the 4th quarter valued at about $64,000. Verition Fund Management LLC acquired a new position in shares of Redwood Trust during the third quarter worth about $64,000. Finally, Tower Research Capital LLC TRC increased its stake in shares of Redwood Trust by 136.9% during 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 buying an additional 6,255 shares during the period. Hedge funds and other institutional investors own 74.34% of the company’s stock.

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.