Holdings of Redwood Trust Inc. (RWT) are aligned with the stars

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.

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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.

Institutional Ownership:

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.

Analysts Ratings:

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.

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