REDWOOD TRUST INC (RWT) Stock Fundamental Analysis
NYSE:RWT - New York Stock Exchange, Inc. - US7580754023 - REIT - Currency: USD
RWT gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 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 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.
RWT had a negative operating cash flow in the past year.
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
The Return On Assets of RWT (0.23%) is comparable to the rest of the industry.
With a Return On Equity value of 3.59%, RWT perfoms like the industry average, outperforming 46.15% of the companies in the same 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's Profit Margin of 4.31% is in line compared 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.
The Gross Margin of RWT (12.54%) is worse than 78.46% of its industry peers.
RWT's Gross Margin has declined in the last couple of years.
| 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
RWT has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
The number of shares outstanding for RWT has been increased compared to 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
RWT has an Altman-Z score of 0.10. This is a bad value and indicates that RWT is not financially healthy and even has some risk of bankruptcy.
The Altman-Z score of RWT (0.10) is better than 75.38% of its industry peers.
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
RWT has a Current 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.
The Current ratio of RWT (0.25) is better than 63.08% of its industry peers.
A Quick Ratio of 0.25 indicates that RWT may have some problems paying its short term obligations.
The Quick ratio of RWT (0.25) is better than 63.08% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.25 | ||
| Quick Ratio | 0.25 |
3. Growth
3.1 Past
RWT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 163.64%, which is quite impressive.
The earnings per share for RWT have been decreasing by -19.83% on average. This is quite bad
Looking at the last year, RWT shows a very strong growth in Revenue. The Revenue has grown by 29.69%.
The Revenue has been growing by 9.67% on average over the past years. This is quite good.
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
The Earnings Per Share is expected to grow by 15.34% on average over the next years. This is quite good.
RWT is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 8.89% yearly.
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
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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
Based on the Price/Earnings ratio of 9.40, the valuation of RWT can be described as reasonable.
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.
The average S&P500 Price/Earnings ratio is at 26.25. RWT is valued rather cheaply when compared to this.
Based on the Price/Forward Earnings ratio of 6.13, the valuation of RWT can be described as very cheap.
RWT's Price/Forward Earnings ratio is rather cheap when compared to the industry. RWT is cheaper than 90.77% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 22.15. RWT is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.4 | ||
| Fwd PE | 6.13 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, RWT is valued a bit cheaper than 80.00% of the companies 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.
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
RWT has a Yearly Dividend Yield of 12.50%, 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 | 12.5% |
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
234.54% of the earnings are spent on dividend by RWT. 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 | 12.5% |
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 | 9.4 | ||
| 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