Redwood Trust (NYSE:RWT) Posts Earnings Results, Misses Estimates By $0.03 EPS

Redwood Trust (NYSE:RWT) issued its earnings results on Tuesday. The real estate investment trust reported $0.18 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.21 by ($0.03), Zacks reports. Redwood Trust had a net margin of 0.42% and a return on equity of 16.02%. The business had revenue of $12.90 million for 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 Down 1.8%

Shares of Redwood Trust stock traded down $0.06 during trading on Wednesday, reaching $3.06. The company’s stock had a trading volume of 4,250,873 shares, compared to its average volume of 2,641,606. The company has a market cap of $383.74 million, a price-to-earnings ratio of -76.36 and a beta of 1.49. Redwood Trust has a 1-year low of $2.69 and a 1-year high of $6.97. The company has a quick ratio of 67.49, a current ratio of 67.49 and a debt-to-equity ratio of 31.69. The company has a 50-day simple moving average of $3.68 and a two-hundred day simple moving average of $4.98.

Redwood Trust Announces Dividend

The firm also recently disclosed a quarterly dividend, which was paid on Wednesday, September 30th. Stockholders of record on Wednesday, September 23rd were given 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 23.6%. Redwood Trust’s dividend payout ratio (DPR) is presently -1,800.00%.

Analyst Ratings Changes

Several analysts have issued reports on RWT shares. Zacks Research downgraded shares of Redwood Trust from a “hold” rating to a “strong sell” rating in a research note on Wednesday, October 14th. Weiss Ratings reaffirmed a “sell (d)” rating on shares of Redwood Trust in a research note on Monday, September 21st. JonesTrading dropped their price target on Redwood Trust from $6.25 to $6.00 and set a “buy” rating on the stock in a research report on Tuesday, July 28th. Piper Sandler decreased their price objective on Redwood Trust from $5.25 to $3.75 and set a “neutral” rating for the company in a report on Friday, October 9th. Finally, 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 note on Friday, August 21st. Seven equities research analysts have rated the stock with a Buy rating, two have given a Hold rating and two have assigned a Sell rating to the stock. According to data from MarketBeat, the company currently has an average rating of “Hold” and an average target price of $4.94.

Insider Transactions at Redwood Trust

In other news, President Dashiell Robinson purchased 63,211 shares of the stock in a transaction on Wednesday, September 16th. The stock was bought at an average price of $3.98 per share, with a total value of $251,579.78. Following the transaction, the president owned 395,050 shares in the company, valued at $1,572,299. The trade was a 19.05% increase in their position. The purchase was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through this hyperlink. Also, CFO Brooke Carillo acquired 26,065 shares of the firm’s stock in a transaction on Tuesday, September 15th. The shares were acquired at an average price of $3.85 per share, with a total value of $100,350.25. Following the completion of the purchase, the chief financial officer owned 140,481 shares in the company, valued at approximately $540,851.85. This trade represents a 22.78% increase in their position. Additional details regarding this purchase are available in the official SEC disclosure. Over the last 90 days, insiders have purchased 244,171 shares of company stock worth $948,402. Insiders own 3.30% of the company’s stock.

About Redwood Trust

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.