Critical Comparison: Net Lease Office Properties (NYSE:NLOP) versus Redwood Trust (NYSE:RWT)

Redwood Trust (NYSE:RWT) and Net Lease Office Properties (NYSE:NLOP) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, profitability, risk, analyst recommendations, valuation, institutional ownership and dividends.

Profitability

This table compares Redwood Trust and Net Lease Office Properties’ 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%
Net Lease Office Properties	-122.90%	-30.16%	-17.58%

Volatility and Risk

Redwood Trust has a beta of 1.57, meaning that its share price is 57% more volatile than the S&P 500. Comparatively, Net Lease Office Properties has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500.

Earnings & Valuation

This table compares Redwood Trust and Net Lease Office Properties”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	1.21	-$2.27 million	$0.55	12.01
Net Lease Office Properties	$174.96 million	2.63	-$131.75 million	N/A	N/A

Redwood Trust has higher revenue and earnings than Net Lease Office Properties.

Institutional and Insider Ownership

74.3% of Redwood Trust shares are owned by institutional investors. Comparatively, 58.3% of Net Lease Office Properties shares are owned by institutional investors. 2.5% of Redwood Trust shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings for Redwood Trust and Net Lease Office Properties, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Redwood Trust	0	4	3	1	2.63
Net Lease Office Properties	0	0	1	0	3.00

Redwood Trust presently has a consensus price target of $7.84, indicating a potential upside of 18.75%. Net Lease Office Properties has a consensus price target of $46.00, indicating a potential upside of 47.55%. Given Net Lease Office Properties’ stronger consensus rating and higher possible upside, analysts clearly believe Net Lease Office Properties is more favorable than Redwood Trust.

Summary

Redwood Trust beats Net Lease Office Properties on 10 of the 13 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 Net Lease Office Properties

Net Lease Office Properties (NYSE: NLOP) is a publicly traded real estate investment trust with a portfolio of 59 high-quality office properties, totaling approximately 8.7 million leasable square feet primarily leased to corporate tenants on a single-tenant net lease basis. The vast majority of the office properties owned by NLOP are located in the U.S., with the balance in Europe. The portfolio consists of 62 corporate tenants operating in a variety of industries, generating annualized based rent (ABR) of approximately $145 million. NLOP's business plan is to focus on realizing value for its shareholders primarily through strategic asset management and disposition of its property portfolio over time. Given WPC's extensive knowledge of the portfolio, NLOP is externally managed and advised by wholly owned affiliates of WPC to successfully execute on its business strategy. Over the course of its 50-year history, WPC has developed significant expertise in the single-tenant office real estate sector, including the operation, leasing, acquisition and development of assets through many market cycles, and has a proven track record of execution.