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 has a bad profitability rating. Also its financial health evaluation is rather negative. RWT is not priced too expensively while it is growing strongly. Keep and eye on this one!
1. Profitability
1.1 Basic Checks
RWT had positive earnings in the past year.
RWT had a negative operating cash flow in the past year.
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
RWT has a Return On Assets of 0.23%. This is comparable to the rest of the industry: RWT outperforms 41.54% of its industry peers.
RWT has a Return On Equity (3.59%) which is comparable to the rest of the industry.
RWT has a Return On Invested Capital (0.42%) which is in line with 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
With a Profit Margin value of 4.31%, RWT perfoms like the industry average, outperforming 41.54% of the companies in the same industry.
RWT's Profit Margin has declined in the last couple of years.
RWT has a Operating Margin of 10.26%. This is comparable to the rest of the industry: RWT outperforms 49.23% of its industry peers.
RWT's Operating Margin has declined in the last couple of years.
Looking at the Gross Margin, with a value of 12.54%, RWT is doing worse than 78.46% 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 | 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
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.
RWT has more shares outstanding than it did 5 years ago.
The debt/assets ratio for RWT is higher compared to a year ago.
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.
RWT's Altman-Z score of 0.10 is fine compared to the rest of the industry. RWT outperforms 75.38% of its industry peers.
RWT has a Debt/Equity ratio of 14.09. This is a high value indicating a heavy dependency on external financing.
Looking at the Debt to Equity ratio, with a value of 14.09, RWT is doing worse than 95.38% of the companies in the same industry.
| 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.
The Current ratio of RWT (0.25) is better than 63.08% of its industry peers.
RWT has a Quick Ratio of 0.25. This is a bad value and indicates that RWT is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.25, RWT is in the better half of 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.
RWT shows a strong growth in Revenue. In the last year, the Revenue has grown by 29.69%.
RWT shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 9.67% yearly.
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
Based on estimates for the next years, RWT will show a quite strong growth in Earnings Per Share. The EPS will grow by 15.34% on average per year.
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.
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
RWT is valuated reasonably with a Price/Earnings ratio of 9.40.
RWT's Price/Earnings ratio is a bit cheaper when compared to the industry. RWT is cheaper than 70.77% of the companies in the same industry.
RWT is valuated cheaply when we compare the Price/Earnings ratio to 26.25, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 6.13, which 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's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 22.15.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.4 | ||
| Fwd PE | 6.13 |
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 | 138.52 |
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.
RWT's earnings are expected to grow with 15.34% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.25
PEG (5Y)N/A
EPS Next 2Y30.74%
EPS Next 3Y15.34%
5. Dividend
5.1 Amount
RWT has a Yearly Dividend Yield of 12.45%, which is a nice return.
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 | 12.45% |
5.2 History
The dividend of RWT decreases each year by -10.27%.
RWT has paid a dividend for at least 10 years, which is 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%
5.45
-0.09 (-1.62%)
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 Cap725.50M
Analysts75.38
Price Target7.59 (39.27%)
Short Float %2.94%
Short Ratio3.31
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 12.45% |
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 | 9.4 | ||
| Fwd PE | 6.13 | ||
| P/S | 0.73 | ||
| P/FCF | N/A | ||
| P/OCF | N/A | ||
| P/B | 0.61 | ||
| P/tB | 0.63 | ||
| EV/EBITDA | 138.52 |
EPS(TTM)0.58
EY10.64%
EPS(NY)0.89
Fwd EY16.31%
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