REDWOOD TRUST INC (RWT) Stock Fundamental Analysis
NYSE:RWT - New York Stock Exchange, Inc. - US7580754023 - REIT - Currency: USD
We assign a fundamental rating of 4 out of 10 to RWT. RWT was compared to 65 industry peers in the Mortgage Real Estate Investment Trusts (REITs)" industry. RWT may be in some trouble as it scores bad on both profitability and health. RWT is growing strongly while it is still valued neutral. This is a good combination!
1. Profitability
1.1 Basic Checks
RWT had positive earnings in the past year.
In the past year RWT has reported a negative cash flow from operations.
The reported net income has been mixed in the past 5 years: RWT reported negative net income in multiple years.
RWT had a negative operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 0.23%, RWT is in line with its industry, outperforming 41.54% of the companies in the same industry.
RWT has a Return On Equity (3.59%) which is comparable to the rest of the industry.
RWT has a Return On Invested Capital of 0.42%. This is comparable to the rest of the industry: RWT outperforms 47.69% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.23% | ||
| ROE | 3.59% | ||
| ROIC | 0.42% |
ROA(3y)-0.38%
ROA(5y)-0.94%
ROE(3y)-4.33%
ROE(5y)-8.65%
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
RWT has a Profit Margin of 4.31%. This is comparable to the rest of the industry: RWT outperforms 41.54% of its industry peers.
In the last couple of years the Profit Margin of RWT has declined.
RWT has a Operating Margin (10.26%) which is in line with its industry peers.
RWT's Operating Margin has declined in the last couple of years.
RWT has a worse Gross Margin (12.54%) than 78.46% of its industry peers.
In the last couple of years the Gross Margin of RWT has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 10.26% | ||
| PM (TTM) | 4.31% | ||
| GM | 12.54% |
OM growth 3Y-34.74%
OM growth 5Y-12.48%
PM growth 3Y-56.86%
PM growth 5Y-30.4%
GM growth 3Y-21.34%
GM growth 5Y-11.34%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so RWT is destroying value.
RWT has more shares outstanding than it did 1 year ago.
Compared to 5 years ago, RWT has more shares outstanding
Compared to 1 year ago, RWT has a worse debt to assets ratio.
2.2 Solvency
Based on the Altman-Z score of 0.10, we must say that RWT is in the distress zone and has some risk of bankruptcy.
With a decent Altman-Z score value of 0.10, RWT is doing good in the industry, outperforming 75.38% of the companies in the same industry.
A Debt/Equity ratio of 14.09 is on the high side and indicates that RWT has dependencies on debt financing.
RWT has a Debt to Equity ratio of 14.09. This is amonst the worse of the industry: RWT underperforms 95.38% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 14.09 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.1 |
ROIC/WACC0.09
WACC4.6%
2.3 Liquidity
A Current Ratio of 0.25 indicates that RWT may have some problems paying its short term obligations.
RWT has a Current ratio of 0.25. This is in the better half of the industry: RWT outperforms 63.08% of its industry peers.
A Quick Ratio of 0.25 indicates that RWT may have some problems paying its short term obligations.
With a decent Quick ratio value of 0.25, RWT is doing good in the industry, outperforming 63.08% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.25 | ||
| Quick Ratio | 0.25 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 163.64% over the past year.
Measured over the past years, RWT shows a very negative growth in Earnings Per Share. The EPS has been decreasing by -19.83% on average per year.
Looking at the last year, RWT shows a very strong growth in Revenue. The Revenue has grown by 29.69%.
Measured over the past years, RWT shows a quite strong growth in Revenue. The Revenue has been growing by 9.67% on average per year.
EPS 1Y (TTM)163.64%
EPS 3Y-39.69%
EPS 5Y-19.83%
EPS Q2Q%75%
Revenue 1Y (TTM)29.69%
Revenue growth 3Y19.75%
Revenue growth 5Y9.67%
Sales Q2Q%16.25%
3.2 Future
RWT is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 15.34% yearly.
Based on estimates for the next years, RWT will show a quite strong growth in Revenue. The Revenue will grow by 8.89% on average per year.
EPS Next Y37.66%
EPS Next 2Y30.74%
EPS Next 3Y15.34%
EPS Next 5YN/A
Revenue Next Year24.4%
Revenue Next 2Y10.83%
Revenue Next 3Y8.89%
Revenue Next 5YN/A
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 9.45, the valuation of RWT can be described as reasonable.
Based on the Price/Earnings ratio, RWT is valued a bit cheaper than 70.77% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 26.35, RWT is valued rather cheaply.
A Price/Forward Earnings ratio of 6.17 indicates a rather cheap valuation of RWT.
Based on the Price/Forward Earnings ratio, RWT is valued cheaply inside the industry as 90.77% of the companies are valued more expensively.
RWT is valuated cheaply when we compare the Price/Forward Earnings ratio to 22.20, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.45 | ||
| Fwd PE | 6.17 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of RWT indicates a somewhat cheap valuation: RWT is cheaper than 80.00% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 138.4 |
4.3 Compensation for Growth
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
A more expensive valuation may be justified as RWT's earnings are expected to grow with 15.34% in the coming years.
PEG (NY)0.25
PEG (5Y)N/A
EPS Next 2Y30.74%
EPS Next 3Y15.34%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 12.50%, RWT is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 14.38, RWT has a dividend in line with its industry peers.
RWT's Dividend Yield is rather good when compared to the S&P500 average which is at 2.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 12.5% |
5.2 History
The dividend of RWT decreases each year by -10.27%.
RWT has been paying a dividend for at least 10 years, so it has a reliable track record.
Dividend Growth(5Y)-10.27%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
RWT pays out 234.54% of its income as dividend. This is not a sustainable payout ratio.
DP234.54%
EPS Next 2Y30.74%
EPS Next 3Y15.34%
5.48
+0.04 (+0.74%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryMortgage Real Estate Investment Trusts (REITs)"
Earnings (Last)
Earnings (Next)
Inst Owners79.96%
Inst Owner Change-0.77%
Ins Owners1.17%
Ins Owner Change4.1%
Market Cap729.50M
Analysts75.38
Price Target7.59 (38.5%)
Short Float %2.94%
Short Ratio3.31
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 12.5% |
Yearly Dividend0.76
Dividend Growth(5Y)-10.27%
DP234.54%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)2.09%
Min EPS beat(2)-21.87%
Max EPS beat(2)26.06%
EPS beat(4)1
Avg EPS beat(4)-3.13%
Min EPS beat(4)-21.87%
Max EPS beat(4)26.06%
EPS beat(8)1
Avg EPS beat(8)-38.17%
EPS beat(12)2
Avg EPS beat(12)-82.2%
EPS beat(16)5
Avg EPS beat(16)-48.18%
Revenue beat(2)0
Avg Revenue beat(2)-9.57%
Min Revenue beat(2)-14.39%
Max Revenue beat(2)-4.75%
Revenue beat(4)1
Avg Revenue beat(4)-7.86%
Min Revenue beat(4)-15.25%
Max Revenue beat(4)2.94%
Revenue beat(8)1
Avg Revenue beat(8)-18.3%
Revenue beat(12)5
Avg Revenue beat(12)94.09%
Revenue beat(16)9
Avg Revenue beat(16)194.63%
PT rev (1m)-7.35%
PT rev (3m)-7.99%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-9.8%
EPS NY rev (1m)-9.67%
EPS NY rev (3m)-8.36%
Revenue NQ rev (1m)1.18%
Revenue NQ rev (3m)0.15%
Revenue NY rev (1m)8.72%
Revenue NY rev (3m)16.36%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.45 | ||
| Fwd PE | 6.17 | ||
| P/S | 0.74 | ||
| P/FCF | N/A | ||
| P/OCF | N/A | ||
| P/B | 0.61 | ||
| P/tB | 0.64 | ||
| EV/EBITDA | 138.4 |
EPS(TTM)0.58
EY10.58%
EPS(NY)0.89
Fwd EY16.22%
FCF(TTM)-44.04
FCFYN/A
OCF(TTM)-44.04
OCFYN/A
SpS7.42
BVpS8.92
TBVpS8.6
PEG (NY)0.25
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.23% | ||
| ROE | 3.59% | ||
| ROCE | 0.62% | ||
| ROIC | 0.42% | ||
| ROICexc | 0.42% | ||
| ROICexgc | 0.43% | ||
| OM | 10.26% | ||
| PM (TTM) | 4.31% | ||
| GM | 12.54% | ||
| FCFM | N/A |
ROA(3y)-0.38%
ROA(5y)-0.94%
ROE(3y)-4.33%
ROE(5y)-8.65%
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3Y-27.55%
ROICexcg growth 5Y-4.26%
ROICexc growth 3Y-27.68%
ROICexc growth 5Y-4.1%
OM growth 3Y-34.74%
OM growth 5Y-12.48%
PM growth 3Y-56.86%
PM growth 5Y-30.4%
GM growth 3Y-21.34%
GM growth 5Y-11.34%
F-Score3
Asset Turnover0.05
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 14.09 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 147.83 | ||
| Cap/Depr | N/A | ||
| Cap/Sales | N/A | ||
| Interest Coverage | 0.12 | ||
| Cash Conversion | N/A | ||
| Profit Quality | N/A | ||
| Current Ratio | 0.25 | ||
| Quick Ratio | 0.25 | ||
| Altman-Z | 0.1 |
F-Score3
WACC4.6%
ROIC/WACC0.09
Cap/Depr(3y)N/A
Cap/Depr(5y)N/A
Cap/Sales(3y)N/A
Cap/Sales(5y)N/A
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)163.64%
EPS 3Y-39.69%
EPS 5Y-19.83%
EPS Q2Q%75%
EPS Next Y37.66%
EPS Next 2Y30.74%
EPS Next 3Y15.34%
EPS Next 5YN/A
Revenue 1Y (TTM)29.69%
Revenue growth 3Y19.75%
Revenue growth 5Y9.67%
Sales Q2Q%16.25%
Revenue Next Year24.4%
Revenue Next 2Y10.83%
Revenue Next 3Y8.89%
Revenue Next 5YN/A
EBIT growth 1Y97.69%
EBIT growth 3Y-21.85%
EBIT growth 5Y-4.01%
EBIT Next Year-2.46%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y-190.82%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-190.82%
OCF growth 3YN/A
OCF growth 5YN/A