Analyzing Ashford Hospitality Trust (NYSE:AHT) & Redwood Trust (NYSE:RWT)

Redwood Trust (NYSE:RWT) and Ashford Hospitality Trust (NYSE:AHT) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, institutional ownership, valuation, dividends, risk, analyst recommendations and earnings.

Volatility and Risk

Redwood Trust has a beta of 1.57, indicating that its share price is 57% more volatile than the S&P 500. Comparatively, Ashford Hospitality Trust has a beta of 2.38, indicating that its share price is 138% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Redwood Trust and Ashford Hospitality Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Redwood Trust	0	3	4	1	2.75
Ashford Hospitality Trust	0	0	0	0	0.00

Redwood Trust presently has a consensus target price of $8.16, suggesting a potential upside of 13.28%. Given Redwood Trust’s stronger consensus rating and higher possible upside, analysts clearly believe Redwood Trust is more favorable than Ashford Hospitality Trust.

Profitability

This table compares Redwood Trust and Ashford Hospitality 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%
Ashford Hospitality Trust	2.84%	-12.89%	1.01%

Earnings & Valuation

This table compares Redwood Trust and Ashford Hospitality Trust”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Redwood Trust	$248.27 million	3.84	-$2.27 million	$0.55	13.09
Ashford Hospitality Trust	$1.37 billion	0.04	-$178.49 million	($12.89)	-0.69

Redwood Trust has higher earnings, but lower revenue than Ashford Hospitality Trust. Ashford Hospitality 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.

Insider and Institutional Ownership

74.3% of Redwood Trust shares are owned by institutional investors. Comparatively, 41.0% of Ashford Hospitality Trust shares are owned by institutional investors. 2.5% of Redwood Trust shares are owned by company insiders. Comparatively, 1.2% of Ashford Hospitality Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Redwood Trust beats Ashford Hospitality Trust on 12 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 Ashford Hospitality Trust

Ashford Hospitality Trust, Inc., together with its subsidiaries (Ashford Trust), is a real estate investment trust (REIT). While our portfolio currently consists of upscale hotels and upper upscale full-service hotels, our investment strategy is predominantly focused on investing in upper upscale full-service hotels in the United States that have revenue per available room (RevPAR) generally less than twice the U.S. national average, and in all methods including direct real estate, equity, and debt. We currently anticipate future investments will predominantly be in upper upscale hotels. We own our lodging investments and conduct our business through Ashford Hospitality Limited Partnership (Ashford Trust OP), our operating partnership. Ashford OP General Partner LLC, a wholly owned subsidiary of Ashford Trust, serves as the sole general partner of our operating partnership.