Redwood Trust (NYSE:RWT – Get Free Report) and Altisource Portfolio Solutions (NASDAQ:ASPS – Get Free Report) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, valuation, profitability, dividends, earnings, institutional ownership and risk.
Volatility & Risk
Redwood Trust has a beta of 1.3, suggesting that its stock price is 30% more volatile than the S&P 500. Comparatively, Altisource Portfolio Solutions has a beta of 0.18, suggesting that its stock price is 82% less volatile than the S&P 500.
Valuation and Earnings
This table compares Redwood Trust and Altisource Portfolio Solutions”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Redwood Trust | $945.16 million | 0.86 | $54.00 million | $0.22 | 27.66 |
| Altisource Portfolio Solutions | $160.13 million | 0.99 | -$35.64 million | ($8.16) | -1.75 |
Redwood Trust has higher revenue and earnings than Altisource Portfolio Solutions. Altisource Portfolio Solutions 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 Recommendations
This is a breakdown of current ratings for Redwood Trust and Altisource Portfolio Solutions, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Redwood Trust | 0 | 5 | 3 | 1 | 2.56 |
| Altisource Portfolio Solutions | 0 | 0 | 0 | 0 | 0.00 |
Redwood Trust presently has a consensus target price of $7.39, indicating a potential upside of 21.43%. Given Redwood Trust’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Redwood Trust is more favorable than Altisource Portfolio Solutions.
Institutional and Insider Ownership
74.3% of Redwood Trust shares are owned by institutional investors. Comparatively, 41.4% of Altisource Portfolio Solutions shares are owned by institutional investors. 2.7% of Redwood Trust shares are owned by company insiders. Comparatively, 2.3% of Altisource Portfolio Solutions shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Profitability
This table compares Redwood Trust and Altisource Portfolio Solutions’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Redwood Trust | 3.93% | 7.82% | 0.49% |
| Altisource Portfolio Solutions | -19.37% | N/A | -14.34% |
Summary
Redwood Trust beats Altisource Portfolio Solutions on 14 of the 15 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 Altisource Portfolio Solutions
Altisource Portfolio Solutions S.A. operates as an integrated service provider and marketplace for the real estate and mortgage industries in the United States and internationally. It operates through Servicer and Real Estate, and Origination segments. The Servicer and Real Estate segment offers property preservation, inspection, title insurance and settlement, real estate valuation, foreclosure trustee, and residential and commercial construction inspection and risk mitigation services. This segment provides Hubzu, an online real estate auction platform, as well as real estate auction, real estate brokerage, and asset management services; Equator, a software-as-a-service technology to manage real estate owned, short sales, foreclosure, bankruptcy, and eviction processes; a vendor invoicing and payment system; RentRange, a single and multi-family rental data, analytics, and rent-based valuation solution; REALSynergy, a commercial loan servicing platform; and NestRange, an automated residential valuation model and analytics solution. The Origination segment offers loan fulfillment, certification and certification insurance services, management services. In addition, it provides Lendors One Loan Automation, a marketplace to order services and a tool to automate components of the loan manufacturing process; TrelixAI, a technology to manage the workflow and automate components of the loan fulfillment, pre and post close quality, and service transfer processes; and ADMS, a document management and data analytics delivery platform. The company serves financial institutions, government-sponsored enterprises, banks, asset managers, servicers, investors, property management firms, real estate brokerages, insurance companies, mortgage bankers, originators, and correspondent and private money lenders. Altisource Portfolio Solutions S.A. was incorporated in 1999 and is headquartered in Luxembourg City, Luxembourg.
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