Redwood reported a decline in net income to $12 million, or 14 cents per fully diluted share, from $25 million, or 29 cents per fully diluted share from the same quarter last year.
REIT taxable income was $15 million, or 19 cents per share versus $20 million or 24 cents per share from the 2013 first quarter.
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Redwood is an internally-managed operating company focused on engaging in residential mortgage banking and commercial mortgage lending activities and investing in mortgage.TheStreet Ratings team rates REDWOOD TRUST INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation: "We rate REDWOOD TRUST INC (RWT) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.3%. Since the same quarter one year prior, revenues slightly increased by 7.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has significantly increased by 351.96% to $272.25 million when compared to the same quarter last year. In addition, REDWOOD TRUST INC has also vastly surpassed the industry average cash flow growth rate of -70.87%.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, REDWOOD TRUST INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- In its most recent trading session, RWT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 40.3% when compared to the same quarter one year ago, falling from $42.08 million to $25.13 million.
- You can view the full analysis from the report here: RWT Ratings Report
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