Demystifying Redwood Trust: Insights From 6 Analyst Reviews

In the latest quarter, 6 analysts provided ratings for Redwood Trust RWT, showcasing a mix of bullish and bearish perspectives.

The following table encapsulates their recent ratings, offering a glimpse into the evolving sentiments over the past 30 days and comparing them to the preceding months.

Analysts have recently evaluated Redwood Trust and provided 12-month price targets. The average target is $7.17, accompanied by a high estimate of $8.00 and a low estimate of $5.50. Experiencing a 7.48% decline, the current average is now lower than the previous average price target of $7.75.

Breaking Down Analyst Ratings: A Detailed Examination

The standing of Redwood Trust among financial experts is revealed through an in-depth exploration of recent analyst actions. The summary below outlines key analysts, their recent evaluations, and adjustments to ratings and price targets.

| Analyst | Analyst Firm | Action Taken | Rating |Current Price Target| Prior Price Target | |--------------------|--------------------|---------------|-----------------|--------------------|--------------------| |Jason Weaver |Jones Trading |Lowers |Buy | $7.00|$8.00 | |Richard Shane |JP Morgan |Lowers |Neutral | $5.50|$6.50 | |Jason Weaver |Jones Trading |Maintains |Buy | $8.00|$8.00 | |Trevor Cranston |JMP Securities |Maintains |Market Outperform| $8.00|$8.00 | |Chris Muller |JMP Securities |Lowers |Market Outperform| $8.00|$9.00 | |Richard Shane |JP Morgan |Lowers |Neutral | $6.50|$7.00 |

Key Insights:

• Action Taken: In response to dynamic market conditions and company performance, analysts update their recommendations. Whether they 'Maintain', 'Raise', or 'Lower' their stance, it signifies their reaction to recent developments related to Redwood Trust. This insight gives a snapshot of analysts' perspectives on the current state of the company.
• Rating: Gaining insights, analysts provide qualitative assessments, ranging from 'Outperform' to 'Underperform'. These ratings reflect expectations for the relative performance of Redwood Trust compared to the broader market.
• Price Targets: Analysts predict movements in price targets, offering estimates for Redwood Trust's future value. Examining the current and prior targets offers insights into analysts' evolving expectations.

Assessing these analyst evaluations alongside crucial financial indicators can provide a comprehensive overview of Redwood Trust's market position. Stay informed and make well-judged decisions with the assistance of our Ratings Table.

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Delving into Redwood Trust's Background

Redwood Trust Inc is a real estate investment trust focused on different areas of housing credit. The company operates in three segments: Sequoia Mortgage Banking includes mortgage loan conduit that acquires residential consumer loans from third-party originators for sale to whole loan buyers and securitization; CoreVest Mortgage Banking segment includes consists of a platform that originates residential investor loans for securitization, sale, or transfer into Redwood Investments portfolio; and Redwood Investments segment consists of organic investments sourced through mortgage banking operations, including securities retained from Sequoia and CoreVest securitization activities. It derives maximum revenue from Redwood Investments segment.

Breaking Down Redwood Trust's Financial Performance

Market Capitalization Perspectives: The company's market capitalization falls below industry averages, signaling a relatively smaller size compared to peers. This positioning may be influenced by factors such as perceived growth potential or operational scale.

Revenue Challenges: Redwood Trust's revenue growth over 3M faced difficulties. As of 31 December, 2024, the company experienced a decline of approximately -37.96%. This indicates a decrease in top-line earnings. As compared to its peers, the revenue growth lags behind its industry peers. The company achieved a growth rate lower than the average among peers in Financials sector.

Net Margin: Redwood Trust's net margin lags behind industry averages, suggesting challenges in maintaining strong profitability. With a net margin of -35.97%, the company may face hurdles in effective cost management.

Return on Equity (ROE): Redwood Trust's ROE is below industry averages, indicating potential challenges in efficiently utilizing equity capital. With an ROE of -1.12%, the company may face hurdles in achieving optimal financial returns.

Return on Assets (ROA): Redwood Trust's ROA falls below industry averages, indicating challenges in efficiently utilizing assets. With an ROA of -0.07%, the company may face hurdles in generating optimal returns from its assets.

Debt Management: Redwood Trust's debt-to-equity ratio surpasses industry norms, standing at 14.63. This suggests the company carries a substantial amount of debt, posing potential financial challenges.

How Are Analyst Ratings Determined?

Ratings come from analysts, or specialists within banking and financial systems that report for specific stocks or defined sectors (typically once per quarter for each stock). Analysts usually derive their information from company conference calls and meetings, financial statements, and conversations with important insiders to reach their decisions.

Some analysts will also offer forecasts for metrics like growth estimates, earnings, and revenue to provide further guidance on stocks. Investors who use analyst ratings should note that this specialized advice comes from humans and may be subject to error.

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This article was generated by Benzinga's automated content engine and reviewed by an editor.