Service Properties Trust (NASDAQ:SVC) versus Starwood Property Trust (NYSE:STWD) Head-To-Head Contrast

Service Properties Trust (NASDAQ:SVC) and Starwood Property Trust (NYSE:STWD) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their risk, institutional ownership, earnings, dividends, valuation, analyst recommendations and profitability.

Earnings & Valuation

This table compares Service Properties Trust and Starwood Property Trust”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Service Properties Trust	$1.88 billion	0.25	-$32.78 million	($1.47)	-1.94
Starwood Property Trust	$1.06 billion	6.18	$339.21 million	$1.17	16.55

Starwood Property Trust has lower revenue, but higher earnings than Service Properties Trust. Service Properties Trust is trading at a lower price-to-earnings ratio than Starwood Property Trust, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Service Properties Trust and Starwood Property Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Service Properties Trust	1	0	1	0	2.00
Starwood Property Trust	0	3	5	1	2.78

Service Properties Trust presently has a consensus target price of $5.38, suggesting a potential upside of 88.60%. Starwood Property Trust has a consensus target price of $22.13, suggesting a potential upside of 14.25%. Given Service Properties Trust’s higher probable upside, research analysts plainly believe Service Properties Trust is more favorable than Starwood Property Trust.

Profitability

This table compares Service Properties Trust and Starwood Property Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Service Properties Trust	-12.87%	-22.67%	-3.37%
Starwood Property Trust	18.82%	9.93%	1.00%

Institutional & Insider Ownership

77.6% of Service Properties Trust shares are held by institutional investors. Comparatively, 49.8% of Starwood Property Trust shares are held by institutional investors. 1.4% of Service Properties Trust shares are held by insiders. Comparatively, 5.4% of Starwood Property Trust shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility and Risk

Service Properties Trust has a beta of 2.19, suggesting that its stock price is 119% more volatile than the S&P 500. Comparatively, Starwood Property Trust has a beta of 1.69, suggesting that its stock price is 69% more volatile than the S&P 500.

Dividends

Service Properties Trust pays an annual dividend of $0.04 per share and has a dividend yield of 1.4%. Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 9.9%. Service Properties Trust pays out -2.7% of its earnings in the form of a dividend. Starwood Property Trust pays out 164.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Starwood Property Trust beats Service Properties Trust on 12 of the 17 factors compared between the two stocks.

About Service Properties Trust

Service Properties Trust (Nasdaq: SVC) is a real estate investment trust with over $11 billion invested in two asset categories: hotels and service-focused retail net lease properties. As of December 31, 2023, SVC owned 221 hotels with over 37,000 guest rooms throughout the United States and in Puerto Rico and Canada, the majority of which are extended stay and select service. As of December 31, 2023, SVC also owned 752 service-focused retail net lease properties totaling approximately 13.3 million square feet throughout the United States. SVC is managed by The RMR Group (Nasdaq: RMR), a leading U.S. alternative asset management company with over $41 billion in assets under management as of December 31, 2023, and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. SVC is headquartered in Newton, MA.

About Starwood Property Trust

Starwood Property Trust, Inc. operates as a real estate investment trust (REIT) in the United States and internationally. The company operates through Commercial and Residential Lending, Infrastructure Lending, Property, and Investing and Servicing segments. The Commercial and Residential Lending segment originates, acquires, finances, and manages commercial first mortgages, non-agency residential mortgages, subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (CMBS), and residential mortgage-backed securities, as well as other real estate and real estate-related debt investments, include distressed or non-performing loans. The Infrastructure lending segment originates, acquires, finances, and manages infrastructure debt investments. The Property segment engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties, such as multifamily properties and commercial properties subject to net leases, that are held for investment. The Investing and Servicing segment manages and works out problem assets; acquires and manages unrated, investment grade, and non-investment grade rated CMBS comprising subordinated interests of securitization and re-securitization transactions; originates conduit loans for the primary purpose of selling these loans into securitization transactions; and acquires commercial real estate assets that include properties acquired from CMBS trusts. The company qualifies as a REIT for federal income tax purposes and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was incorporated in 2009 and is headquartered in Greenwich, Connecticut.