Comparing COPT Defense Properties (NYSE:CDP) & Redwood Trust (NYSE:RWT)

Redwood Trust (NYSE:RWT) and COPT Defense Properties (NYSE:CDP) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, dividends, risk, profitability, analyst recommendations and institutional ownership.

Analyst Ratings

This is a breakdown of current ratings and price targets for Redwood Trust and COPT Defense Properties, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Redwood Trust	0	3	5	1	2.78
COPT Defense Properties	0	3	5	0	2.63

Redwood Trust presently has a consensus target price of $8.14, indicating a potential upside of 9.98%. COPT Defense Properties has a consensus target price of $30.00, indicating a potential downside of 2.22%. Given Redwood Trust’s stronger consensus rating and higher probable upside, analysts plainly believe Redwood Trust is more favorable than COPT Defense Properties.

Dividends

Redwood Trust pays an annual dividend of $0.68 per share and has a dividend yield of 9.2%. COPT Defense Properties pays an annual dividend of $1.18 per share and has a dividend yield of 3.8%. Redwood Trust pays out 971.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. COPT Defense Properties pays out -109.3% of its earnings in the form of a dividend.

Risk and Volatility

Redwood Trust has a beta of 1.58, indicating that its stock price is 58% more volatile than the S&P 500. Comparatively, COPT Defense Properties has a beta of 0.99, indicating that its stock price is 1% less volatile than the S&P 500.

Profitability

This table compares Redwood Trust and COPT Defense Properties’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Redwood Trust	4.45%	4.93%	0.37%
COPT Defense Properties	-15.75%	-7.52%	-2.71%

Insider and Institutional Ownership

74.3% of Redwood Trust shares are held by institutional investors. 2.5% of Redwood Trust shares are held by company insiders. Comparatively, 1.1% of COPT Defense Properties shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Redwood Trust and COPT Defense Properties”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
COPT Defense Properties	$684.98 million	5.05	-$73.47 million	($1.08)	-28.41

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

Summary

Redwood Trust beats COPT Defense Properties on 14 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 COPT Defense Properties

COPT Defense, an S&P MidCap 400 Company, is a self-managed REIT focused on owning, operating and developing properties in locations proximate to, or sometimes containing, key U.S. Government (USG) defense installations and missions (referred to as its Defense/IT Portfolio). The Company's tenants include the USG and their defense contractors, who are primarily engaged in priority national security activities, and who generally require mission-critical and high security property enhancements. As of December 31, 2023, the Company's Defense/IT Portfolio of 190 properties, including 24 owned through unconsolidated joint ventures, encompassed 21.7 million square feet and was 97.2% leased.