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 ...

Financial Performance - Total interest income for the three months ended September 30, 2024, was $248,643,000, an increase of 40.4% compared to $177,074,000 for the same period in 2023[8]. - Net income for the three months ended September 30, 2024, was $14,826,000, compared to a net loss of $30,810,000 for the same period in 2023[10]. - Basic earnings per common share for the nine months ended September 30, 2024, was $0.40, compared to a loss of $0.27 for the same period in 2023[8]. - Other comprehensive income for the three months ended September 30, 2024, was $7,941,000, compared to a loss of $(2,647,000) for the same period in 2023[10]. - Net income for the nine months ended September 30, 2024, was $60,622,000, compared to a net loss of $23,317,000 for the same period in 2023[16]. - Total non-interest income for Q3 2024 was $44,224,000, significantly improving from a loss of $9,594,000 in Q3 2023[8]. - Comprehensive income for Q3 2024 was $22,767,000, compared to a comprehensive loss of $33,457,000 in Q3 2023[10]. Assets and Liabilities - Total liabilities and equity as of September 30, 2024, amounted to $18,427,426,000, up from $14,504,327,000 as of December 31, 2023[5]. - Total assets of consolidated variable interest entities (VIEs) were $14,312,672,000 as of September 30, 2024, compared to $10,988,885,000 as of December 31, 2023[5]. - Total assets as of September 30, 2024, amounted to $18,427,426,000, showcasing the company's strong asset base[32]. - Total liabilities as of September 30, 2024, were $12,652,870,000, up from $9,244,843,000 at the end of 2023, indicating a growth in leverage[39]. - The company reported total liabilities of $12,648,727,000 as of September 30, 2024, compared to $10,096,308,000 at the end of 2023[126]. Shareholder Returns - Cumulative distributions to stockholders reached $(2,507,684,000) as of September 30, 2024, compared to $(2,439,873,000) at the end of 2023[5]. - Common dividends declared for the nine months ended September 30, 2024, totaled $67,811,000, compared to $66,447,000 for the same period in 2023[13][15]. - The company declared common dividends of $0.17 per share for Q3 2024, totaling $23,565,000[12]. Mortgage Banking Activities - The company’s mortgage banking activities generated net income of $39,569,000 for the three months ended September 30, 2024, compared to $19,440,000 for the same period in 2023[8]. - Mortgage banking activities generated net income of $73,049,000 for the nine months ended September 30, 2024, compared to $52,663,000 for the same period in 2023, reflecting a year-over-year increase of 38.7%[36]. - The Residential Consumer Mortgage Banking segment contributed $22,755,000 to net income, while the Residential Investor Mortgage Banking segment contributed $5,683,000[30]. Cash Flow and Financing - Cash flows used in operating activities totaled $(5,008,540,000) for the nine months ended September 30, 2024, compared to $(867,461,000) in 2023, indicating a significant increase in cash outflow[16]. - Net cash provided by financing activities was $3,428,316,000 for the nine months ended September 30, 2024, compared to $158,586,000 in 2023, indicating a strong financing position[16]. - Proceeds from borrowings on debt obligations reached $7,207,997,000 in 2024, significantly higher than $2,398,412,000 in 2023[16]. Segment Reporting - The company operates in three segments: Residential Consumer Mortgage Banking, Residential Investor Mortgage Banking, and Investment Portfolio[29]. - The company expects to adopt new accounting guidance related to segment reporting and income tax disclosures by the required dates[28]. Investment and Fair Value - The fair value of residential consumer loans was reported at $11,157,159,000 as of September 30, 2024, while residential investor loans were valued at $4,746,174,000[39]. - The fair value of derivative assets was reported at $78,933,000, with total derivative liabilities at $7,977,000 as of September 30, 2024[39]. - The company recorded investment fair value changes of $(2,837,000) for the three months ended September 30, 2024, compared to $(14,430,000) for the same period in 2023[68]. General and Administrative Expenses - The company incurred general and administrative expenses totaling $36,008,000 for the three months ended September 30, 2024[30]. - Total General and Administrative Expenses for Q3 2024 were $36,008,000, an increase of 21.1% from $29,697,000 in Q3 2023[155]. Tax and Valuation - The effective income tax rate for Q3 2024 was 17.2%, compared to (2.8)% in Q3 2023, indicating a significant change in tax position[157]. - As of September 30, 2024, the company has a valuation allowance of $117 million for certain state deferred tax assets, indicating potential realizability issues[157].

Redwood Trust (RWT) reported $25.5 million in revenue for the quarter ended September 2024, representing a year-over-year increase of 27.5%. EPS of $0.18 for the same period compares to $0.09 a year ago. The reported revenue compares to the Zacks Consensus Estimate of $25.96 million, representing a surprise of -1.77%. The company delivered an EPS surprise of +28.57%, with the consensus EPS estimate being $0.14. While investors scrutinize revenue and earnings changes year-over-year and how they compare with ...

Redwood Trust (RWT) came out with quarterly earnings of $0.18 per share, beating the Zacks Consensus Estimate of $0.14 per share. This compares to earnings of $0.09 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 28.57%. A quarter ago, it was expected that this specialty finance company would post earnings of $0.12 per share when it actually produced earnings of $0.13, delivering a surprise of 8.33%. Over the last four quarte ...