Redwood Trust, Inc. 9.125% Seni (RWTN): fair value, margin of safety and Wheel Score

Is RWTN undervalued?

RWTN closed at 22.50 on 16 Oct 2026, more than 30% above the GLS average fair value of 7.87. Only 0 of the 6 models that produced a value sit above the price. By our models the shares are priced well beyond what the filed earnings, cash flow and book value support; the Sunday Scan drops names like this at the "below fair value" rule.

There is a wide gap between Lynch (1.96) and GLS Growth (21.30). When the models are this far apart the "fair value" is really a range, and the margin of safety above should be read with that range in mind.

The nightly engine files RWTN under High Growth: revenue and earnings growing fast enough that the growth-based models carry the valuation.

Nine valuation models for RWTN

Each model turns the latest filed numbers into a value per share; the GLS fair value is the simple average of the ones that produce a positive number. The last two rows are shown for reference and never enter the average. The Quote page lets you switch any model off and add your own margin of safety.

Quality and financial health

Redwood Trust, Inc. 9.125% Seni scores 5 of 9 on the Piotroski F-score: a middling result that falls one point short of the Sunday Scan's "6 or more" rule. Some of the nine tests on profitability, leverage and efficiency are failed, so the accounts are worth a look before selling a put on the name. A GLS Moat score of 2.6/10 is a weak reading: the ten-year history the score grades (revenue, EPS, book value, margins, cash flow, share count, ROIC) has not been steady, so the Moat part of the Wheel Score contributes little.

Returns on capital are thin or negative - ROIC -0.3%, ROE -7.1%, ROA -0.3% - with debt at 22.68 times equity and negative free cash flow. Debt of 22.68 times equity is on the high side for the sector and is worth checking against the cash flow before treating the stock as a long-term hold.

The dividend yield is high at 24.41% (payout ratio 1804%) - a payout above 100% of earnings, which is not covered by profits. A yield this size is often the market's way of pricing a risk to the payout, so the health score and cash flow matter more than usual.

Institutional ownership scores 5/10, insider activity 5/10 and Congressional trading 5/10 on the GLS smart-money scales.

Wheel Score 25: No options

No options are listed on Redwood Trust, Inc. 9.125% Seni in our nightly snapshot. The Wheel Score is therefore capped at 39 (it reads 25) and the stock is left out of every options screen; the fair value and health figures above are still useful for a plain stock position.

Volume runs at 6k shares a day on a market cap of $2.8B, with a beta of 0.08 - a low beta, so day-to-day moves are smaller than the market's; the Stability part of the Wheel Score gives that 10 of 20.

The Wheel Score ranks ~7,400 US stocks for selling cash-secured puts and covered calls; it is updated nightly and is not a recommendation. The walkthrough lesson shows how the score fits into a trade, start to finish.

Upcoming events

The next earnings report is due on 3 Nov 2026 (after the close), 18 days away; a 30-45-day put sold today would expire after it, which is worth weighing against the premium.

Earnings, dividend, IPO, split and economic calendars for the whole market, filterable to your watchlists.

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The 12 companies below are the closest to Redwood Trust, Inc. 9.125% Seni by market cap within the REIT - Mortgage industry, each with its own fact sheet; the Compare page puts up to eight of them side by side.

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