Redwood Trust (NYSE:RWT) Posts Earnings Results, Misses Expectations By $0.08 EPS

Redwood Trust (NYSE:RWT) posted its quarterly earnings results on Tuesday. The real estate investment trust reported $0.15 earnings per share for the quarter, missing the consensus estimate of $0.23 by ($0.08), FiscalAI reports. Redwood Trust had a positive return on equity of 14.53% and a negative net margin of 7.23%.

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 Trading Up 0.3%

Shares of RWT stock opened at $4.94 on Tuesday. Redwood Trust has a 12-month low of $4.19 and a 12-month high of $6.97. The company has a current ratio of 59.63, a quick ratio of 59.63 and a debt-to-equity ratio of 28.42. The stock’s 50-day moving average price is $5.07 and its 200-day moving average price is $5.52. The stock has a market capitalization of $618.21 million, a price-to-earnings ratio of -6.33 and a beta of 1.37.

Redwood Trust Announces Dividend

The business also recently disclosed a quarterly dividend, which was paid on Tuesday, June 30th. Shareholders of record on Tuesday, June 23rd were issued a dividend of $0.18 per share. This represents a $0.72 annualized dividend and a dividend yield of 14.6%. The ex-dividend date of this dividend was Tuesday, June 23rd. Redwood Trust’s dividend payout ratio is -92.31%.

Analyst Upgrades and Downgrades

A number of equities analysts have weighed in on RWT shares. Citizens Jmp decreased their target price on Redwood Trust from $7.00 to $6.00 and set a “market outperform” rating for the company in a research report on Wednesday, July 8th. Wall Street Zen raised shares of Redwood Trust from a “sell” rating to a “hold” rating in a report on Saturday, May 9th. JPMorgan Chase & Co. reduced 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 note on Friday, July 17th. JonesTrading reissued a “buy” rating and set a $6.25 price objective on shares of Redwood Trust in a report on Thursday, April 30th. Finally, Weiss Ratings restated a “sell (d)” rating on shares of Redwood Trust in a research report on Wednesday, June 24th. Six equities research analysts have rated the stock with a Buy rating, two have issued a Hold rating and two have assigned a Sell rating to the company’s stock. Based on data from MarketBeat.com, the company has an average rating of “Hold” and an average target price of $6.11.

Hedge Funds Weigh In On Redwood Trust

Hedge funds and other institutional investors have recently added to or reduced their stakes in the company. Corient Private Wealth LLC raised its holdings in shares of Redwood Trust by 74.5% during the 4th quarter. Corient Private Wealth LLC now owns 19,658 shares of the real estate investment trust’s stock worth $109,000 after acquiring an additional 8,390 shares in the last quarter. TMB Capital Partners LLC bought a new stake in Redwood Trust in the fourth quarter worth $64,000. Invesco Ltd. raised 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 purchasing an additional 516,630 shares in the last quarter. Mercer Global Advisors Inc. ADV lifted its position in Redwood Trust by 40.9% during the fourth quarter. Mercer Global Advisors Inc. ADV now owns 21,625 shares of the real estate investment trust’s stock valued at $120,000 after purchasing an additional 6,281 shares during the last quarter. Finally, Vident Advisory LLC lifted its position in Redwood Trust by 4.7% during the fourth quarter. Vident Advisory LLC now owns 39,606 shares of the real estate investment trust’s stock valued at $219,000 after purchasing an additional 1,773 shares during the last quarter. 74.34% of the stock is owned by institutional investors.

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.