KKR Real Estate Finance Trust (NYSE:KREF) vs. Redwood Trust (NYSE:RWT) Head to Head Survey

Redwood Trust (NYSE:RWT) and KKR Real Estate Finance Trust (NYSE:KREF) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, valuation, risk and earnings.

Dividends

Redwood Trust pays an annual dividend of $0.68 per share and has a dividend yield of 9.6%. KKR Real Estate Finance Trust pays an annual dividend of $1.00 per share and has a dividend yield of 8.8%. Redwood Trust pays out 123.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. KKR Real Estate Finance Trust pays out -333.3% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares Redwood Trust and KKR Real Estate Finance Trust”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Redwood Trust	$724.00 million	1.29	-$2.27 million	$0.55	12.84
KKR Real Estate Finance Trust	$640.41 million	1.24	-$30.85 million	($0.30)	-38.07

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

Volatility & Risk

Redwood Trust has a beta of 1.59, suggesting that its share price is 59% more volatile than the S&P 500. Comparatively, KKR Real Estate Finance Trust has a beta of 0.99, suggesting that its share price is 1% less volatile than the S&P 500.

Profitability

This table compares Redwood Trust and KKR Real Estate Finance Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Redwood Trust	9.35%	6.01%	0.43%
KKR Real Estate Finance Trust	0.40%	9.46%	1.86%

Analyst Ratings

This is a summary of current ratings and target prices for Redwood Trust and KKR Real Estate Finance Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Redwood Trust	0	3	5	1	2.78
KKR Real Estate Finance Trust	0	0	6	0	3.00

Redwood Trust presently has a consensus price target of $8.19, indicating a potential upside of 16.07%. KKR Real Estate Finance Trust has a consensus price target of $12.83, indicating a potential upside of 12.38%. Given Redwood Trust’s higher probable upside, equities analysts clearly believe Redwood Trust is more favorable than KKR Real Estate Finance Trust.

Insider & Institutional Ownership

74.3% of Redwood Trust shares are owned by institutional investors. Comparatively, 70.2% of KKR Real Estate Finance Trust shares are owned by institutional investors. 2.5% of Redwood Trust shares are owned by company insiders. Comparatively, 1.6% of KKR Real Estate Finance Trust shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Redwood Trust beats KKR Real Estate Finance Trust on 11 of the 16 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 KKR Real Estate Finance Trust

KKR Real Estate Finance Trust Inc., a mortgage real estate investment trust, focuses primarily on originating and acquiring transitional senior loans secured by commercial real estate (CRE) assets. It engages in the origination and purchase of credit investments related to CRE, including leveraged and unleveraged commercial real estate loans. The company has elected to be taxed as a real estate investment trust and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. KKR Real Estate Finance Trust Inc. was incorporated in 2014 and is headquartered in New York, New York.