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Two Harbors Investment Q4 Earnings on the Deck: Here's What to Expect

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Key Takeaways

  • TWO is slated to report Q4 2025 after market close on Feb. 2, following weak past earnings.
  • The $1.3B UWM deal will add TWO's $176B MSR portfolio and RoundPoint platform, creating $150M in synergies.
  • Lower funding costs and improved hedging are likely to support TWO's earnings this quarter.

Two Harbors Investment Corp. (TWO - Free Report) is scheduled to report fourth-quarter 2025 results on Feb. 2, 2026, after market close.

In the last reported quarter, this real estate investment trust (REIT), which focuses on investing in financing and managing residential mortgage-backed securities and mortgage loans, posted earnings available for distribution per share of 36 cents, missing the Zacks Consensus Estimate by 10%.

Two Harbors Investment has a weak earnings surprise history. Its earnings missed the Zacks Consensus Estimate in all of the four trailing quarters, with an average negative surprise of 13.34%.

Recent Development for TWO

In December 2025, Two Harbors Investment entered into a definitive agreement to be acquired by UWM Holdings Corporation (UWMC - Free Report) in a $1.3 billion all-stock transaction. The deal will add TWO’s $176 billion mortgage servicing rights (MSR) portfolio and RoundPoint’s servicing platform to UWMC’s operations. This combination is expected to create a more integrated mortgage business and generate nearly $150 million in annual synergies.

The transaction is also likely to improve efficiencies in financing, hedging and secondary market operations by leveraging UWMC’s origination strength alongside TWO’s capital markets expertise. The deal is slated to close in the second quarter of 2026, subject to customary approvals.

Key Factors to Influence TWO in Q4

The steady fixed-income markets are likely to have supported asset valuations and improved hedging effectiveness for TWO in the to-be-reported quarter.

Additionally, a positively sloped yield curve might have supported mortgage REIT’s valuations. Further, the yield curve also steepened during the quarter. With this, agency mortgage REITs are likely to have witnessed a tangible book value increase as spreads on benchmark indices tightened during the quarter. This is likely to have increased TWO’s book value per share in the quarter to be reported.

The Zacks Consensus Estimate for TWO's servicing income is pegged at $151.4 million in the fourth quarter, down 9.1% from the previous quarter.

The 30-year fixed mortgage rates in the fourth quarter of 2025 averaged around 6.2%, slightly below the 6.3% seen at the end of the third quarter. This is likely to have supported the mortgage demand. Further, the refinance activity and origination volumes showed decent growth during the quarter.

A large part of TWO’s mortgage-backed securities holdings is anticipated to have witnessed elevated levels of constant prepayment rates from seasonal demand. This is expected to have supported net premium amortization in the fourth quarter, aiding growth in interest income and average asset yield to some extent.

The Zacks Consensus Estimate for total interest income is pegged at $90.8 million, indicating a 3% decline from the prior quarter.

Since September 2025, the Federal Reserve has cut interest rates three times, including two reductions in the fourth quarter. Given this, the company is expected to have seen lower funding costs. This is likely to have supported net interest income (NII) growth of TWO in the to-be-reported quarter. The Zacks Consensus Estimate for NII is pegged at negative $13 million compared with negative $23.5 million reported in the prior quarter.

The Zacks Consensus Estimate for fourth-quarter earnings has remained unchanged at 30 cents per share over the past seven days. This suggests a year-over-year increase of 50%.

What the Zacks Model Reveals for Two Harbors Investment

Our proven model does not predict an earnings beat for TWO this time around. This is because the company does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: Two Harbors Investment has an Earnings ESP of 0.00%.

Zacks Rank: The company currently has a Zacks Rank of 5 (Strong Sell).

Upcoming Release Dates of Other REITs

Here are a couple of REIT stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time:

Redwood Trust, Inc. (RWT - Free Report) is expected to release fourth-quarter 2025 earnings on Feb. 11. The company has an Earnings ESP of +15.56% and a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for RWT’s quarterly earnings has been revised upward to 23 cents per share over the past seven days.

The Earnings ESP for Equity Residential (EQR - Free Report) is +0.64% and carries a Zacks Rank #3 at present. The company is also likely to report fourth-quarter 2025 results on Feb. 5.

Over the past week, the Zacks Consensus Estimate for EQR’s quarterly earnings has been unchanged at $1.04 per share.

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