Critical Survey: Redwood Trust (NYSE:RWT) & Rayonier (NYSE:RYN)

Redwood Trust (NYSE:RWT) and Rayonier (NYSE:RYN) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, valuation, risk, profitability and institutional ownership.

Earnings and Valuation

This table compares Redwood Trust and Rayonier’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Redwood Trust	$724.00 million	1.35	-$2.27 million	$0.07	105.71
Rayonier	$1.05 billion	4.26	$173.49 million	$1.12	26.74

Rayonier has higher revenue and earnings than Redwood Trust. Rayonier is trading at a lower price-to-earnings ratio than Redwood Trust, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Redwood Trust and Rayonier, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Redwood Trust	0	3	5	1	2.78
Rayonier	0	2	0	0	2.00

Redwood Trust currently has a consensus price target of $7.69, indicating a potential upside of 3.98%. Rayonier has a consensus price target of $32.50, indicating a potential upside of 8.51%. Given Rayonier’s higher possible upside, analysts plainly believe Rayonier is more favorable than Redwood Trust.

Volatility and Risk

Redwood Trust has a beta of 1.58, meaning that its stock price is 58% more volatile than the S&P 500. Comparatively, Rayonier has a beta of 1.05, meaning that its stock price is 5% more volatile than the S&P 500.

Insider and Institutional Ownership

74.3% of Redwood Trust shares are held by institutional investors. Comparatively, 89.1% of Rayonier shares are held by institutional investors. 2.5% of Redwood Trust shares are held by insiders. Comparatively, 0.8% of Rayonier shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Redwood Trust pays an annual dividend of $0.64 per share and has a dividend yield of 8.6%. Rayonier pays an annual dividend of $1.14 per share and has a dividend yield of 3.8%. Redwood Trust pays out 914.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Rayonier pays out 101.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Redwood Trust and Rayonier’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Redwood Trust	3.06%	4.83%	0.38%
Rayonier	15.92%	3.21%	1.62%

Summary

Rayonier beats Redwood Trust on 9 of the 17 factors compared between the two stocks.

About Redwood Trust

Redwood Trust, Inc., together with its subsidiaries, operates as a specialty finance company in the United States. The company operates through three segments: Residential Consumer Mortgage Banking, Residential Investor Mortgage Banking, and Investment Portfolio. The Residential Consumer Mortgage Banking segment operates a mortgage loan conduit that acquires residential loans from third-party originators for subsequent sale, securitization, or transfer to its investment portfolio. This segment also offers derivative financial instruments to manage risks associated with residential loans. The Residential Investor Mortgage Banking segment operates a platform that originates business purpose loans to investors in single-family and multifamily residential properties and bridge loans for subsequent securitization, sale, or transfer into its investment portfolio. The Investment Portfolio segment invests in securities retained from residential consumer and investor securitization activities, and business purpose lending bridge loans, as well as residential mortgage-backed securities issued by third parties, Freddie Mac K-Series multifamily loan securitizations and reperforming loan securitizations, servicer advance investments, home equity investments, and other housing-related investments. The company is elected to be taxed as a real estate investment trust (REIT) for federal income tax purposes. Redwood Trust, Inc. was incorporated in 1994 and is headquartered in Mill Valley, California.

About Rayonier

Rayonier is a leading timberland real estate investment trust with assets located in some of the most productive softwood timber growing regions in the United States and New Zealand. As of December 31, 2023, Rayonier owned or leased under long-term agreements approximately 2.7 million acres of timberlands located in the U.S. South (1.85 million acres), U.S. Pacific Northwest (418,000 acres) and New Zealand (421,000 acres).