Redwood Trust (NYSE:RWT) Shares Gap Down on Disappointing Earnings

Redwood Trust, Inc. (NYSE:RWT) gapped down prior to trading on Friday after the company announced weaker than expected quarterly earnings. The stock had previously closed at $6.46, but opened at $6.24. Redwood Trust shares last traded at $6.04, with a volume of 610,114 shares traded.

The real estate investment trust reported $0.13 earnings per share (EPS) for the quarter, missing analysts’ consensus estimates of $0.16 by ($0.03). Redwood Trust had a net margin of 9.35% and a return on equity of 6.01%.

Redwood Trust Increases Dividend

The company also recently declared a quarterly dividend, which was paid on Monday, December 30th. Shareholders of record on Monday, December 23rd were paid a dividend of $0.18 per share. This represents a $0.72 annualized dividend and a yield of 11.83%. The ex-dividend date of this dividend was Monday, December 23rd. This is an increase from Redwood Trust’s previous quarterly dividend of $0.17. Redwood Trust’s payout ratio is presently 130.91%.

Analyst Ratings Changes

A number of equities research analysts recently commented on RWT shares. JPMorgan Chase & Co. decreased their target price on Redwood Trust from $7.00 to $6.50 and set a “neutral” rating for the company in a report on Tuesday, January 21st. StockNews.com upgraded shares of Redwood Trust from a “sell” rating to a “hold” rating in a research note on Monday, November 11th. Finally, JMP Securities reduced their target price on shares of Redwood Trust from $9.00 to $8.00 and set a “market outperform” rating for the company in a report on Thursday, January 23rd. Five investment analysts have rated the stock with a hold rating, three have given a buy rating and one has issued a strong buy rating to the company. According to data from MarketBeat, the company has an average rating of “Moderate Buy” and an average price target of $7.84.

Institutional Trading of Redwood Trust

A number of hedge funds have recently added to or reduced their stakes in the company. LaSalle St. Investment Advisors LLC acquired a new position in shares of Redwood Trust in the fourth quarter worth about $37,000. Brown Brothers Harriman & Co. purchased a new position in shares of Redwood Trust in the 3rd quarter valued at about $39,000. GAMMA Investing LLC raised its holdings in Redwood Trust by 65.4% in the 3rd quarter. GAMMA Investing LLC now owns 5,169 shares of the real estate investment trust’s stock worth $40,000 after purchasing an additional 2,043 shares during the period. Sovran Advisors LLC purchased a new position in Redwood Trust during the fourth quarter worth approximately $63,000. Finally, KBC Group NV grew its holdings in Redwood Trust by 86.7% in the fourth quarter. KBC Group NV now owns 10,313 shares of the real estate investment trust’s stock valued at $67,000 after purchasing an additional 4,788 shares during the period. 74.34% of the stock is owned by hedge funds and other institutional investors.

Redwood Trust Price Performance

The company has a quick ratio of 44.36, a current ratio of 44.36 and a debt-to-equity ratio of 14.55. The firm has a market capitalization of $806.25 million, a PE ratio of 10.95 and a beta of 1.57. The stock has a 50-day moving average price of $6.59 and a 200 day moving average price of $7.10.

Redwood Trust Company Profile

Redwood Trust, Inc, together with its subsidiaries, operates as a specialty finance company in the United States. The company operates through three segments: Residential Consumer Mortgage Banking, Residential Investor Mortgage Banking, and Investment Portfolio. The Residential Consumer Mortgage Banking segment operates a mortgage loan conduit that acquires residential loans from third-party originators for subsequent sale, securitization, or transfer to its investment portfolio.