Redwood Trust Inc. 9.500% Senior Notes Due 2030 (RWTQ)

FairStock Score: 33/100 — RISKY

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

As a creditor looking at Redwood Trust's 9.500% senior notes due 2030, I start with the business. Redwood is a mortgage specialty finance company with 351 employees, operating through Sequoia, CoreVest, Redwood Investments, and Legacy. That is a cyclical, capital-intensive business with no obvious moat; success depends on securitization markets and credit spreads. The filed numbers are erratic. In fiscal Q2 2026, the quarter ended 2026-06-30, net income was -$1.1M and diluted EPS -$0.03. In fiscal Q1 2026, net income was -$5.5M and EPS -$0.07. Fiscal Q3 2025 showed -$7.7M and -$0.08. Fiscal Q2 2025 was a severe -$98.5M and -$0.76. For FY2025, the year ended 2025-12-31, the company lost $70.0M, or -$0.63 per diluted share. FY2024 earned $54.0M, or $0.32 per share, while FY2023 lost $2.3M, or -$0.11 per share. That is a turnaround, not a steady compounder. FairStock's calculations show a weak 0.57% ROE, 0.02% ROCE, and a very high D/E of 29.40. The equity trades at 2.82 times book, and the FairStock Score is 33/100. The note price is $19.45 as of the 2026-10-13 close, within a 52-week range of $19.06 to $26.30. The high 9.500% coupon and senior ranking are attractive, but senior notes are still debt and the issuer's thin profitability and high leverage leave little room for error. I would want to see sustained positive net income and a safer capital structure before trusting the coupon.

In plain English: Redwood Trust is a specialty finance company that buys and packages residential and investment-property mortgages. It has recently reported losses, carries a lot of debt, and earns low returns, so the business looks weak. The 9.500% senior notes trade at $19.45, near the low end of their 52-week range, which suggests the market sees meaningful risk; the high coupon may look attractive, but the weak financials make the notes speculative.

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Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q2 2026 10-Q (period ended 2026-06-30) · fiscal Q1 2026 10-Q (period ended 2026-03-31) · fiscal Q3 2025 10-Q (period ended 2025-09-30) · fiscal Q2 2025 10-Q (period ended 2025-06-30) · FY2025 10-K (period ended 2025-12-31) · FY2024 10-K (period ended 2024-12-31) · FY2023 10-K (period ended 2023-12-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer