Redwood Trust, Inc.
Redwood Trust, Inc. Fundamental Analysis
Redwood Trust, Inc. (RWT) shows moderate financial fundamentals with a PE ratio of -7.61, profit margin of -10.87%, and ROE of -9.19%. The company generates $0.8B in annual revenue with moderate year-over-year growth of 3.57%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of -165.9/100 based on profitability, valuation, growth, and balance sheet metrics. The F grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze RWT's fundamental strength across five key dimensions:
Efficiency Score
WeakRWT struggles to generate sufficient returns from assets.
Valuation Score
ExcellentRWT trades at attractive valuation levels.
Growth Score
WeakRWT faces weak or negative growth trends.
Financial Health Score
WeakRWT carries high financial risk with limited liquidity.
Profitability Score
WeakRWT struggles to sustain strong margins.
Key Financial Metrics
Is RWT Expensive or Cheap?
P/E Ratio
RWT trades at -7.61 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, RWT's PEG of 0.03 indicates potential undervaluation.
Price to Book
The market values Redwood Trust, Inc. at 0.73 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at -101.69 times EBITDA. This is generally considered low.
How Well Does RWT Make Money?
Net Profit Margin
For every $100 in sales, Redwood Trust, Inc. keeps $-10.87 as profit after all expenses.
Operating Margin
Core operations generate 27.58 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $-9.19 in profit for every $100 of shareholder equity.
ROA
Redwood Trust, Inc. generates $-0.34 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Redwood Trust, Inc. generates limited operating cash flow of $-12.67B, signaling weaker underlying cash strength.
Free Cash Flow
Redwood Trust, Inc. generates weak or negative free cash flow of $-12.67B, restricting financial flexibility.
FCF Per Share
Each share generates $-101.38 in free cash annually.
FCF Yield
RWT converts -18.12% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
-7.61
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.03
vs 25 benchmark
P/B Ratio
Price to book value ratio
0.73
vs 25 benchmark
P/S Ratio
Price to sales ratio
0.83
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
26.42
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.00
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
-0.09
vs 25 benchmark
ROA
Return on assets percentage
-0.00
vs 25 benchmark
ROCE
Return on capital employed
0.009
vs 25 benchmark
How RWT Stacks Against Its Sector Peers
| Metric | RWT Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | -7.61 | 23.28 | Better (Cheaper) |
| ROE | -9.19% | 679.00% | Weak |
| Net Margin | -10.87% | -35377.00% (disorted) | Weak |
| Debt/Equity | 26.42 | -21.26 (disorted) | Distorted |
| Current Ratio | 0.00 | 26.02 | Weak Liquidity |
| ROA | -0.34% | -910.00% (disorted) | Weak |
RWT outperforms its industry in 1 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Redwood Trust, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
450.73%
Industry Style: Income, Inflation Hedge, REIT
High GrowthEPS CAGR
87.87%
Industry Style: Income, Inflation Hedge, REIT
High GrowthFCF CAGR
-1912.31%
Industry Style: Income, Inflation Hedge, REIT
Declining