Redwood Trust (NYSE: RWT) is one of 37 publicly-traded companies in the “Mortgage REITs” industry, but how does it weigh in compared to its peers? We will compare Redwood Trust to similar businesses based on the strength of its valuation, profitability, dividends, analyst recommendations, earnings, risk and institutional ownership.

Analyst Recommendations

This is a summary of current ratings and price targets for Redwood Trust and its peers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Redwood Trust 0 0 0 0 N/A
Redwood Trust Competitors 115 845 842 31 2.43

As a group, “Mortgage REITs” companies have a potential upside of 1.92%. Given Redwood Trust’s peers higher probable upside, analysts plainly believe Redwood Trust has less favorable growth aspects than its peers.

Risk & Volatility

Redwood Trust has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500. Comparatively, Redwood Trust’s peers have a beta of 0.71, suggesting that their average stock price is 29% less volatile than the S&P 500.

Earnings and Valuation

This table compares Redwood Trust and its peers gross revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Redwood Trust $215.70 million N/A 9.51
Redwood Trust Competitors $320.94 million $123.24 million 1.53

Redwood Trust’s peers have higher revenue and earnings than Redwood Trust. Redwood Trust is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Dividends

Redwood Trust pays an annual dividend of $1.12 per share and has a dividend yield of 6.7%. Redwood Trust pays out 64.0% of its earnings in the form of a dividend. As a group, “Mortgage REITs” companies pay a dividend yield of 10.0% and pay out 80.4% of their earnings in the form of a dividend.

Profitability

This table compares Redwood Trust and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Redwood Trust 46.04% 12.02% 2.50%
Redwood Trust Competitors 49.97% 10.41% 2.70%

Insider & Institutional Ownership

84.7% of Redwood Trust shares are owned by institutional investors. Comparatively, 57.8% of shares of all “Mortgage REITs” companies are owned by institutional investors. 2.3% of Redwood Trust shares are owned by insiders. Comparatively, 3.3% of shares of all “Mortgage REITs” companies are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Redwood Trust peers beat Redwood Trust on 6 of the 11 factors compared.

Redwood Trust Company Profile

Redwood Trust, Inc., through its subsidiaries, focuses on investing in mortgage and other real estate related assets. The Company is engaged in mortgage banking activities. The Company operates through three segments: Residential Investments, Residential Mortgage Banking and Commercial. The Residential Investments segment includes a portfolio of investments in residential mortgage-backed securities (RMBS) retained from its Sequoia securitizations. The Residential Mortgage Banking segment consists of operating a mortgage loan conduit that acquires residential loans from third-party originators for subsequent sale, securitization, or transfer to its investment portfolio. Its Commercial segment consists of investments in multi-family securities and commercial mortgage-backed securities, as well as a remaining commercial loan investment following the sale of the remainder of its commercial mezzanine loan portfolio.

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