REDWOOD TRUST INC (RWT)
US7580754023 - REIT
RWT gets a fundamental rating of 3 out of 10. The analysis compared the fundamentals against 65 industry peers in the Mortgage Real Estate Investment Trusts (REITs)" industry. Both the profitability and financial health of RWT have multiple concerns. RWT is not overvalued while it is showing excellent growth. This is an interesting combination.
1. Profitability
1.1 Basic Checks
In the past year RWT was profitable.
In the past year RWT has reported a negative cash flow from operations.
In multiple years RWT reported negative net income over the last 5 years.
In the past 5 years RWT always reported negative operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 0.15%, RWT is in line with its industry, outperforming 40.63% of the companies in the same industry.
RWT has a Return On Equity (2.07%) which is comparable to the rest of the industry.
RWT has a Return On Invested Capital of 0.35%. This is comparable to the rest of the industry: RWT outperforms 43.75% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.15% | ||
| ROE | 2.07% | ||
| ROIC | 0.35% |
ROA(3y)0.24%
ROA(5y)-0.8%
ROE(3y)1.91%
ROE(5y)-7.56%
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
The Profit Margin of RWT (2.95%) is comparable to the rest of the industry.
The Operating Margin of RWT (8.42%) is comparable to the rest of the industry.
RWT's Operating Margin has declined in the last couple of years.
Looking at the Gross Margin, with a value of 15.57%, RWT is doing worse than 73.44% of the companies in the same industry.
In the last couple of years the Gross Margin of RWT has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 8.42% | ||
| PM (TTM) | 2.95% | ||
| GM | 15.57% |
OM growth 3Y-20.37%
OM growth 5Y-28.64%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-11.65%
GM growth 5Y-16.54%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), RWT is destroying value.
RWT has more shares outstanding than it did 1 year ago.
The number of shares outstanding for RWT has been increased compared to 5 years ago.
Compared to 1 year ago, RWT has an improved debt to assets ratio.
2.2 Solvency
Based on the Altman-Z score of 0.13, we must say that RWT is in the distress zone and has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 0.13, RWT is in the better half of the industry, outperforming 71.88% of the companies in the same industry.
RWT has a Debt/Equity ratio of 12.26. This is a high value indicating a heavy dependency on external financing.
With a Debt to Equity ratio value of 12.26, RWT is not doing good in the industry: 93.75% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 12.26 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.13 |
ROIC/WACC0.07
WACC4.72%
2.3 Liquidity
A Current Ratio of 0.30 indicates that RWT may have some problems paying its short term obligations.
With a Current ratio value of 0.30, RWT perfoms like the industry average, outperforming 57.81% of the companies in the same industry.
RWT has a Quick Ratio of 0.30. This is a bad value and indicates that RWT is not financially healthy enough and could expect problems in meeting its short term obligations.
RWT has a Quick ratio (0.30) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.3 | ||
| Quick Ratio | 0.3 |
3. Growth
3.1 Past
RWT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 142.68%, which is quite impressive.
RWT shows a very negative growth in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -38.30% yearly.
Looking at the last year, RWT shows a very strong growth in Revenue. The Revenue has grown by 20.98%.
RWT shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.94% yearly.
EPS 1Y (TTM)142.68%
EPS 3Y-57.4%
EPS 5Y-38.3%
EPS Q2Q%4532.54%
Revenue 1Y (TTM)20.98%
Revenue growth 3Y9.92%
Revenue growth 5Y14.94%
Sales Q2Q%-2.69%
3.2 Future
The Earnings Per Share is expected to grow by 62.52% on average over the next years. This is a very strong growth
Based on estimates for the next years, RWT will show a quite strong growth in Revenue. The Revenue will grow by 15.43% on average per year.
EPS Next Y245.29%
EPS Next 2Y115.15%
EPS Next 3Y62.52%
EPS Next 5YN/A
Revenue Next Year8.97%
Revenue Next 2Y12.54%
Revenue Next 3Y15.43%
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 21.19, which indicates a rather expensive current valuation of RWT.
Compared to the rest of the industry, the Price/Earnings ratio of RWT is on the same level as its industry peers.
RWT is valuated rather cheaply when we compare the Price/Earnings ratio to 31.52, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 10.01 indicates a reasonable valuation of RWT.
RWT's Price/Forward Earnings is on the same level as the industry average.
RWT is valuated cheaply when we compare the Price/Forward Earnings ratio to 22.55, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.19 | ||
| Fwd PE | 10.01 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of RWT indicates a rather cheap valuation: RWT is cheaper than 82.81% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 167.44 |
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 62.52% in the coming years.
PEG (NY)0.09
PEG (5Y)N/A
EPS Next 2Y115.15%
EPS Next 3Y62.52%
5. Dividend
5.1 Amount
RWT has a Yearly Dividend Yield of 8.78%, which is a nice return.
With a Dividend Yield of 8.78, RWT pays less dividend than the industry average, which is at 12.35. 90.63% of the companies listed in the same industry pay a better dividend than RWT!
RWT's Dividend Yield is rather good when compared to the S&P500 average which is at 2.22.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 8.78% |
5.2 History
The dividend of RWT decreases each year by -8.56%.
RWT has paid a dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)-8.56%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
367.77% of the earnings are spent on dividend by RWT. This is not a sustainable payout ratio.
DP367.77%
EPS Next 2Y115.15%
EPS Next 3Y62.52%
REDWOOD TRUST INC
NYSE:RWT (10/14/2024, 9:32:54 AM)
7.415
-0.04 (-0.47%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryMortgage Real Estate Investment Trusts (REITs)"
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap980.41M
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 8.78% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
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EPS NY rev (3m)
Revenue NQ rev (1m)
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.19 | ||
| Fwd PE | 10.01 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)0.09
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.15% | ||
| ROE | 2.07% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 8.42% | ||
| PM (TTM) | 2.95% | ||
| GM | 15.57% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.05
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 12.26 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 0.3 | ||
| Quick Ratio | 0.3 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)142.68%
EPS 3Y-57.4%
EPS 5Y
EPS Q2Q%
EPS Next Y245.29%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)20.98%
Revenue growth 3Y9.92%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y