Is RWT a high-quality business?

AlphaMadera's AlphaQuality grade scores Redwood Trust, Inc. on six pillars — profitability, capital efficiency, balance-sheet strength, growth durability, cash generation, and shareholder yield. The composite letter grade reflects how RWT compares to a Buffett-style quality bar.

What is Redwood Trust, Inc.'s AlphaQuality grade?

AlphaQuality assigns a letter grade (A through F) to RWT based on a six-pillar quantitative model. The live page shows the composite grade plus each pillar's individual score with the underlying metrics.

What makes RWT a quality stock?

AlphaQuality looks at return on capital, free-cash-flow margins, debt-to-equity, revenue stability, dividend and buyback policy, and operating-margin trend. Stocks scoring well across all six pillars earn higher grades — the methodology favors compounders over cyclicals.

RWT - Redwood Trust, Inc.

Price: -- -- | CONSENSUS: Buy DETAILS | PRICE TARGET: $6.00 DETAILS

AlphaQuality

Quantitative six-pillar business-quality grade

Real Estate Investment Trust

AlphaQuality — archetype-weighted quantitative grade

F 17.3 / 100 pillar composite

Composite Grade

Composite of six pillars weighted for real estate investment trust businesses. Purely quantitative — the six pillars score only reported financials, no analyst input.

⚠ 3 of the last 5 fiscal years showed negative net income — AlphaQuality will not grade above F for persistent unprofitability in a real estate investment trust business.

Grade overrides the 17.3 pillar composite because hard gates always win. Use the pillar breakdown below to see where the underlying numbers sit.

Profitability

Weight: 20%

F 0.0

Scored using FFO margin — REIT-archetype substitution.

FFO Margin -5.4% 0/100

Capital Efficiency

Weight: 15%

F 18.1

5yr Avg ROE 1.0% 15/100
5yr Share-Count CAGR 2.7% 24/100

Growth Quality

Weight: 15%

C+ 60.0

Scored using FFO/share — REIT-archetype substitution.

Positive-FFO Years (5) 3/5 60/100

Cash Generation

Weight: 15%

F 0.0

Scored using AFFO dividend coverage — REIT substitution.

AFFO Dividend Coverage -95.24x 0/100
5yr FCF/NI -63.19x 0/100

Balance Sheet

Weight: 25%

F 4.5

Scored using Debt/Assets — REIT-archetype substitution.

Debt / Assets 93.5% 0/100
Interest Coverage (EBIT/Int) 0.96x 13/100

Stability

Weight: 10%

C- 44.6

EPS Volatility (σ/μ) 0.45 36/100
Negative-Revenue Years (5) 2/5 60/100
Piotroski F-Score 4 44/100

2 of 2 gurus held; 1 new buy; 1 added; 1 full exit.

Holders: 2 +1
Avg Δ position: +227.3%
New buys: 1
Full exits: 1

Laffont new
Wood sold -100%
Cooperman increased +227%

How this is calculated

AlphaQuality grades six pillars from 0-100 and weights each by archetype:

Profitability (20%) — FFO Margin
Capital Efficiency (15%) — 5yr Avg ROE, 5yr Share-Count CAGR
Growth Quality (15%) — Positive-FFO Years (5)
Cash Generation (15%) — AFFO Dividend Coverage, 5yr FCF/NI
Balance Sheet (25%) — Debt / Assets, Interest Coverage (EBIT/Int)
Stability (10%) — EPS Volatility (σ/μ), Negative-Revenue Years (5), Piotroski F-Score

The six pillars read only reported financial-statement fields — no analyst targets or consensus ratings. The archetype that picks which pillar formulas apply is not fully price-free, though: it can route a company to the distressed/ungradable archetype based on price vs. its 52-week high, and beta affects one classification check. A minimum of 5 fiscal years of audited statements is required. Insurers and banks are graded on their own methodology — insurers on loss ratio, its trend and stability, and premiums-to-surplus; banks on the efficiency ratio, its trend and stability, and equity-to-assets — rather than on industrial margin/ROIC signals. Distressed, highly leveraged infrastructure, asset-manager, and other financial businesses are declared ungradable rather than forced into a numeric score.