Granite Point Mortgage Trust (NASDAQ: GPMT) and Redwood Trust (NYSE:RWT) are both small-cap financials companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, valuation, risk and earnings.

Dividends

Redwood Trust pays an annual dividend of $1.12 per share and has a dividend yield of 6.7%. Granite Point Mortgage Trust does not pay a dividend. Redwood Trust pays out 64.0% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of current recommendations for Granite Point Mortgage Trust and Redwood Trust, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Granite Point Mortgage Trust 0 2 2 0 2.50
Redwood Trust 0 0 0 0 N/A

Granite Point Mortgage Trust presently has a consensus price target of $20.00, indicating a potential upside of 4.44%. Given Granite Point Mortgage Trust’s higher possible upside, analysts clearly believe Granite Point Mortgage Trust is more favorable than Redwood Trust.

Profitability

This table compares Granite Point Mortgage Trust and Redwood Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Granite Point Mortgage Trust 56.49% N/A N/A
Redwood Trust 46.04% 12.02% 2.50%

Valuation and Earnings

This table compares Granite Point Mortgage Trust and Redwood Trust’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Granite Point Mortgage Trust N/A N/A N/A N/A N/A
Redwood Trust $215.70 million 5.94 $134.95 million $1.75 9.50

Redwood Trust has higher revenue and earnings than Granite Point Mortgage Trust.

Institutional & Insider Ownership

85.8% of Redwood Trust shares are held by institutional investors. 2.3% of Redwood Trust shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Redwood Trust beats Granite Point Mortgage Trust on 6 of the 10 factors compared between the two stocks.

Granite Point Mortgage Trust Company Profile

Granite Point Mortgage Trust Inc. is focused primarily on directly originating, investing in and managing senior floating-rate commercial mortgage loans and other debt, such as commercial real estate investments. The Company formed to continue and expand the commercial real estate lending business. The Company is a long-term, fundamental value-oriented investor. The Company constructs its own investment portfolio on a loan-by-loan basis, emphasizing rigorous credit underwriting, selectivity and diversification available in the market. The Company provides intermediate-term bridge or transitional financing for a variety of purposes, including acquisitions, recapitalizations, refinancing and a range of business plans including lease-up, renovation, repositioning and repurposing of the property. It generally targets the top 25-50, metropolitan statistical areas (MSA) in the United States.

Redwood Trust Company Profile

Redwood Trust, Inc., through its subsidiaries, focuses on investing in mortgage and other real estate related assets. The Company is engaged in mortgage banking activities. The Company operates through three segments: Residential Investments, Residential Mortgage Banking and Commercial. The Residential Investments segment includes a portfolio of investments in residential mortgage-backed securities (RMBS) retained from its Sequoia securitizations. The Residential Mortgage Banking segment consists of operating a mortgage loan conduit that acquires residential loans from third-party originators for subsequent sale, securitization, or transfer to its investment portfolio. Its Commercial segment consists of investments in multi-family securities and commercial mortgage-backed securities, as well as a remaining commercial loan investment following the sale of the remainder of its commercial mezzanine loan portfolio.

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