Redwood Trust (RWT) reported $27.6 million in revenue for the quarter ended December 2024, representing a year-over-year increase of 38%. EPS of $0.13 for the same period compares to $0.05 a year ago.The reported revenue represents a surprise of +6.15% over the Zacks Consensus Estimate of $26 million. With the consensus EPS estimate being $0.16, the EPS surprise was -18.75%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street ...

Core Viewpoint - Redwood Trust reported quarterly earnings of $0.13 per share, missing the Zacks Consensus Estimate of $0.16 per share, but showing an improvement from $0.05 per share a year ago, indicating a mixed performance in earnings expectations [1][2]. Earnings Performance - The company experienced an earnings surprise of -18.75% for the recent quarter, while it had a positive surprise of 28.57% in the previous quarter [1][2]. - Over the last four quarters, Redwood Trust has surpassed consensus EPS estimates two times [2]. Revenue Insights - Redwood Trust posted revenues of $27.6 million for the quarter ended December 2024, exceeding the Zacks Consensus Estimate by 6.15%, compared to $20 million in the same quarter last year [2]. - The company has also topped consensus revenue estimates two times over the last four quarters [2]. Stock Performance - Since the beginning of the year, Redwood Trust shares have declined by approximately 1.4%, contrasting with the S&P 500's gain of 2.9% [3]. Future Outlook - The company's earnings outlook will be crucial for determining the stock's immediate price movement, with current consensus EPS estimates at $0.18 for the coming quarter and $0.78 for the current fiscal year [4][7]. - The estimate revisions trend for Redwood Trust is currently mixed, resulting in a Zacks Rank 3 (Hold), suggesting the shares are expected to perform in line with the market in the near future [6]. Industry Context - The REIT and Equity Trust industry, to which Redwood Trust belongs, is currently positioned in the bottom 46% of over 250 Zacks industries, indicating potential challenges ahead [8].

Financial Performance - GAAP net loss attributable to common stockholders was $(8.4) million, equating to $(0.07) per basic and diluted common share[5]. - Net loss attributable to common stockholders was $8.4 million in Q4 2024, compared to net income of $13.1 million in Q3 2024[27]. - Non-GAAP Earnings Available for Distribution (EAD) was $18.4 million, or $0.13 per basic common share, down from $0.18 in the previous quarter[5]. - Earnings available for distribution (non-GAAP) was $18.4 million in Q4 2024, down from $25.2 million in Q3 2024[27]. - EAD return on common equity (non-GAAP, annualized) was 6.6% in Q4 2024, compared to 8.7% in Q3 2024[27]. - Total non-interest income for Q4 2024 was $17.6 million, significantly lower than $44.2 million in Q3 2024, primarily due to fair value changes[24]. Asset and Equity Changes - Total assets decreased to $18.258 billion in Q4 2024 from $18.427 billion in Q3 2024, reflecting a reduction in residential consumer loans[25]. - Stockholders' equity at the end of Q4 2024 was $1.188 billion, down from $1.223 billion in Q3 2024[25]. - GAAP book value per common share decreased to $8.46 at December 31, 2024, from $8.74 at September 30, 2024, reflecting an economic return on book value of (1.1)% for Q4 2024[5]. Revenue and Income Sources - Net interest income for Q4 2024 was $27.6 million, an increase from $25.5 million in Q3 2024, driven by accretive capital deployment[24]. - Sequoia mortgage banking activities generated net income of $16.8 million in Q4 2024, down from $26.7 million in Q3 2024, despite maintaining gain on sale margins above the target range[24]. - CoreVest mortgage banking activities net income decreased to $1.1 million in Q4 2024 from $1.8 million in Q3 2024 due to non-recurring fee revenue in the previous quarter[24]. Loan and Financing Activities - Locked loans totaled $2.3 billion, a 4% increase from $2.2 billion in Q3 2024, with quarterly flow volume increasing by 57%[5]. - Distributed $2.5 billion of loans through securitizations ($1.1 billion) and whole loan sales ($1.4 billion)[5]. - Funded loans amounted to $501 million, a 9% increase from $458 million in Q3 2024, with term loan volume rising 43% to $227 million[5]. - The recourse leverage ratio was 2.4x at December 31, 2024, down from 2.5x at September 30, 2024[5]. - The company maintained unrestricted cash and cash equivalents of $245 million and total excess warehouse financing capacity of $4.7 billion[9]. Strategic Outlook - The CEO highlighted expectations for further progress in 2025, focusing on strategic bank relationships and innovative loan products to enhance market share[8]. Non-GAAP Measures - EAD Net contribution and EAD Net contribution ROC are non-GAAP measures used to analyze the profitability of each business segment[10]. - GAAP ROC is defined as GAAP Net contribution adjusted for investment fair value changes, realized gains and losses, acquisition-related expenses, and organizational restructuring charges[10]. - Acquisition-related expenses include transaction costs and ongoing amortization of intangible assets from Riverbend and CoreVest acquisitions[10]. - EAD ROC is calculated by dividing EAD by average capital utilized for each respective period[10].

Core Viewpoint - Analysts forecast that Redwood Trust (RWT) will report quarterly earnings of $0.16 per share, indicating a year-over-year increase of 220% and revenues of $26 million, reflecting a 30% increase compared to the previous year [1]. Earnings Projections - Over the last 30 days, there has been a downward revision of 1.4% in the consensus EPS estimate for the quarter, indicating a collective reconsideration by analysts [2]. - Changes in earnings projections are crucial for predicting investor reactions, with empirical studies showing a strong correlation between earnings estimate trends and short-term stock price movements [3]. Revenue and Income Estimates - Analysts predict that 'Net interest income' will reach $25.90 million, up from $20 million in the same quarter last year [5]. - The estimate for 'Total non-interest income (loss), net' is projected to be $37.06 million, down from $44 million reported in the same quarter of the previous year [5]. - 'Non-interest income (loss) - Investment fair value changes, net' is expected to be -$5.75 million, a decrease from $15 million in the prior year [6]. Stock Performance - Shares of Redwood Trust have increased by 8.1% over the past month, outperforming the Zacks S&P 500 composite, which moved up by 4.2% [6]. - With a Zacks Rank 4 (Sell), RWT is anticipated to underperform the overall market in the near future [6].

Group 1 - Redwood Trust, Inc. is a real estate investment trust (REIT) focusing on mortgages, categorized as an mREIT [1] - The company has preferred shares (NYSE: RWT.PR.A) that provide income benefits [1] - The author has a background in finance and economics, with a focus on income investing through various financial instruments [1] Group 2 - The article does not provide any specific financial data or performance metrics related to Redwood Trust, Inc. [1]

Group 1 - Redwood Trust (NYSE: RWT) has an 11% dividend yield that has recently been raised, indicating strength in the company [1] - The increase in dividends is viewed as a positive sign, prompting further investigation into the stock's valuation [1] - The article reflects a value investing approach, focusing on finding bargains in various markets, particularly emerging markets [1] Group 2 - The author expresses admiration for renowned investors and emphasizes a willingness to take calculated risks in investment decisions [1] - There is a focus on maintaining an investment journal to track successes and learn from failures, highlighting the importance of self-reflection in investing [1] - The article suggests a shift towards an Austrian economic perspective in future writings, influenced by notable economists [1]

Core Viewpoint - The upgrade of Redwood Trust to a Zacks Rank 2 indicates a positive earnings outlook, which is likely to lead to increased buying pressure and a rise in stock price [2][9]. Earnings Estimates and Stock Movement - Changes in a company's future earnings potential, as shown by earnings estimate revisions, are strongly correlated with near-term stock price movements, influenced by institutional investors [3][12]. - Analysts have raised their earnings estimates for Redwood Trust, with the Zacks Consensus Estimate increasing by 15.8% over the past three months [14]. Zacks Rating System - The Zacks Rank stock-rating system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [4]. - Redwood Trust's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [7][8]. Earnings Outlook for Redwood Trust - Redwood Trust is expected to earn $0.57 per share for the fiscal year ending December 2024, reflecting a year-over-year increase of 147.8% [5]. - The upward trend in earnings estimates indicates an improvement in the company's underlying business, which should be positively recognized by investors [12].

Redwood Trust (RWT) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #1 (Strong Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.The sole determinant of the Zacks rating is a company's changing earnings picture. The Zacks Consensus Estimate -- the consensus of EPS estimates from the sell-side analysts covering the stock -- for the current and following years is tracked by the ...

UNITED STATES OF AMERICA SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended: September 30, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | |-----------------------------------------------------------------------------------------------------------------|-----------------------------------------------------| ...

Financial Data and Key Metrics Changes - The company reported GAAP earnings of $13 million or $0.09 per share for Q3 2024, compared to $14 million or $0.10 per share in the prior quarter [33] - Earnings available for distribution (EAD) reached $25 million or $0.18 per share for Q3 2024, up from $19 million or $0.13 per share in the prior quarter, resulting in an EAD return on equity of 8.7% [33] - Book value per share increased slightly to $8.74, up from $8.73 as of June 30 [34] Business Line Data and Key Metrics Changes - Mortgage banking performance was a key driver of strong Q3 performance, with GAAP contribution from these businesses tripling versus Q2 [17] - The residential consumer mortgage banking segment achieved a return on capital of 30%, up from 16% in Q2, while the Residential Investor segment EAD return on capital was 58% compared to 13% last quarter [35] - The company locked $2.2 billion of loans during Q3, compared to $2.7 billion in Q2, with a notable increase in refinance activity representing 27% of overall flow volume during Q3 [18][21] Market Data and Key Metrics Changes - Interest rates moved significantly throughout Q3, with the 10-year treasury yield rallying to just under 3.6%, opening a brief window for consumers seeking to refinance [21] - The company completed three Sequoia securitizations during Q3 for $1.5 billion, maintaining a reliable monthly cadence [22] - The company funded $458 million of investor loans during Q3, highlighted by record Single Asset Bridge originations [24] Company Strategy and Development Direction - The company plans to focus on mission-expanding strategies designed to leverage areas of high potential growth and improve access to housing [15] - The company has added senior leadership to support its focus on expanding access to private credit investors [16] - The company believes its platform's value proposition will grow as more regions turn to non-agency housing finance solutions [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for increased housing activity in the coming quarters despite recent rate volatility [13] - The company anticipates that elevated margins will normalize to historical ranges as longer-dated interest rates revert higher [36] - Management highlighted the importance of addressing housing accessibility as a central mission, especially in light of the upcoming presidential election [9][80] Other Important Information - The company reported a total economic return approaching 7% year-to-date, positioning it to potentially exceed its dividend yield on book value annually [34] - The company has secured or renewed $1.7 billion in financing capacity with key partners [41] - The company’s capital deployment remains strong, with $157 million invested in Q3, which is expected to drive incremental net interest income for Q4 [45] Q&A Session Summary Question: Inquiry about the net discount on the portfolio and credit risk - Management clarified that the majority of the discount is in the reperforming loan portfolio, which continues to perform strongly, while acknowledging different risks in capital securities [47][48] Question: Disaggregation of mortgage banking gains - Management indicated that roughly half of the total mortgage banking revenue was driven by rates, with spread tightening contributing significantly [53][54] Question: Insights on leverage and liquidity - Management confirmed that leverage has trended back down to around 2.2 times and expressed comfort with the current liquidity levels [59][60] Question: Discussion on HEI income and future expectations - Management explained that HEI income was expected to revert as home price appreciation assumptions have come down, but they remain bullish on long-term home price trends [65][66] Question: Thoughts on dividend sustainability - Management expressed satisfaction with the recent dividend increase and indicated a commitment to continue growing the dividend as earnings available for distribution improve [75][78] Question: Election implications for the company - Management noted that both major party candidates recognize the need for improved housing accessibility, which aligns with the company's mission and could create opportunities [80][81]