Redwood Trust, Inc. (RWTQ): fair value, margin of safety and Wheel Score

Is RWTQ undervalued?

Redwood Trust, Inc. (RWTQ) closed at 19.35 on 16 Oct 2026, 163% above the GLS average fair value of 7.35. 5 of the 6 models that produced a number value the shares below the current price. A gap this wide usually means the market is paying for growth or a story the trailing numbers do not show yet; the models work from filed results, not forecasts, so they are conservative by design.

The 6 models disagree widely: GLS Growth gives 0.2698 while DDM gives 27.38. A spread that wide means the average is sensitive to which methods you trust; the model table below shows where each one lands, and the Quote page lets you switch any of them off.

The nightly engine files RWTQ under Speculative / Distressed - negative earnings or a Piotroski score of 3 or less - which caps its Wheel Score at 45 and keeps it out of the Sunday Scan.

Nine valuation models for RWTQ

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

Financial health is weak: RWTQ passes 0 of the nine Piotroski tests. Our screens drop the stock at the health rule; a low score is often the reason a stock looks cheap on the valuation models. The GLS Moat score is low at 2.5 out of 10, which says the ten-year record of revenue, earnings, margins and returns on capital has been inconsistent - growth and shocks rather than steady compounding.

Returns on capital are thin or negative - ROIC -0.3%, ROE -7.1%, ROA -0.3% - with debt at 22.65 times equity and negative free cash flow. Debt of 22.65 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 9.61% (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 12: No options

RWTQ has no listed options in the nightly snapshot, so there is nothing to sell and the stock cannot be wheeled however good the business; the Wheel Score is capped at 39 and shown as "No options" (12 here). The valuation and quality numbers still apply to owning the shares outright.

Volume runs at 79k shares a day on a market cap of $2.4B, with a beta of 1.51 - a high beta, so the stock tends to move more than the market and a strike can be gapped through; the Stability part of the Wheel Score gives that 9 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 4 Nov 2026, 19 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.

Similar stocks in REIT - Diversified

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

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