Redwood Trust Inc. (NYSE: RWT) stock fell -1.45% on Friday to $8.16 against a previous-day closing price of $8.28. With 1.21 million shares changed hands, the volume of the stock remained lighter than its average volume of 1.83 million shares. During the session, the REIT – Mortgage company that operates in wider Real Estate sector, reached to the highest price of $8.37 whereas the lowest price it dropped to was $8.15. The 52-week range on RWT shows that it touched its highest point at $14.17 and its lowest point at $6.57 during that stretch. It currently has a 1-year price target of $11.06. With its current market cap of 966.88 million, RWT has annualized dividend of $0.92 while the current yield stands at 11.27%. Beta for the stock currently stands at 1.11.
Price Performance and Earnings:
Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of RWT was down-trending over the past week, with a drop of -4.34%, but this was up by 1.37% over a month. Three-month performance dropped to -18.56% while six-month performance fell -33.28%. The stock lost -31.14% in the past year, while it has lost -38.13% so far this year. A look at the trailing 12-month EPS for RWT yields 1.90 with Next year EPS estimates of 1.32. For the next quarter, that number is 0.24. This implies an EPS growth rate of 146.30% for this year and 46.78% for next year. EPS is expected to grow by 29.74% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 9.00%.
Float and Shares Shorts:
At present, 119.88 million RWT shares are outstanding with a float of 119.18 million shares on hand for trading. On Jul 14, 2022, short shares totaled 8.59 million, which was 7.30% higher than short shares on Jun 14, 2022. In addition to Mr. Christopher J. Abate CPA as the firm’s CEO & Director, Mr. Dashiell I. Robinson serves as its Pres & Director.
Through their ownership of 76.39% of RWT’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 42.70% of RWT, in contrast to 28.61% held by mutual funds. Shares owned by individuals account for 2.80%. As the largest shareholder in RWT with 15.46% of the stake, BlackRock Fund Advisors holds 18,601,638 shares worth 18,601,638. A second-largest stockholder of RWT, The Vanguard Group, Inc., holds 12,069,253 shares, controlling over 10.03% of the firm’s shares. SSgA Funds Management, Inc. is the third largest shareholder in RWT, holding 4,129,943 shares or 3.43% stake. With a 7.05% stake in RWT, the iShares Core S&P Small Cap ETF is the largest stakeholder. A total of 8,481,851 shares are owned by the mutual fund manager. The Vanguard Total Stock Market Index, which owns about 2.94% of RWT stock, is the second-largest Mutual Fund holder. It holds 3,537,786 shares valued at 27.28 million. Vanguard Small Cap Index Fund holds 2.55% of the stake in RWT, owning 3,062,087 shares worth 23.61 million.
Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for RWT since 9 analysts follow the stock currently. There are 8 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 1 believe that the stock is worth HOLDING, 0 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With RWT analysts setting a high price target of $13.50 and a low target of $10.00, the average target price over the next 12 months is $10.94. Based on these targets, RWT could surge 65.44% to reach the target high and rise by 22.55% to reach the target low. Reaching the average price target will result in a growth of 34.07% from current levels.
EPS: Estimates vs Actual
It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. RWT will report FY 2022 earnings on 02/23/2023. Analysts have provided yearly estimates in a range of $1.04 being high and -$0.36 being low. For RWT, this leads to a yearly average estimate of $0.37. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Redwood Trust Inc. surprised analysts by -$0.92 when it reported -$0.85 EPS against a consensus estimate of $0.07. The surprise factor in the prior quarter was $0.05. Based on analyst estimates, the high estimate for the next quarter is $0.37 and the low estimate is $0.09. The average estimate for the next quarter is thus $0.22.
Summary of Insider Activity:
Insiders traded RWT stock several times over the past three months with 7 Buys and 0 Sells. In these transactions, 60,503 shares were bought while 0 shares were sold. The number of buy transactions has increased to 15 while that of sell transactions has risen to 1 over the past year. The total number of shares bought during that period was 161,926 while 9,936 shares were sold.