Comparing Highwoods Properties (NYSE:HIW) and Starwood Property Trust (NYSE:STWD)

Starwood Property Trust (NYSE:STWD) and Highwoods Properties (NYSE:HIW) are both mid-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, institutional ownership, valuation and risk.

Analyst Recommendations

This is a breakdown of recent recommendations for Starwood Property Trust and Highwoods Properties, as provided by MarketBeat.com.

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

Starwood Property Trust presently has a consensus price target of $22.13, suggesting a potential upside of 11.25%. Highwoods Properties has a consensus price target of $30.71, suggesting a potential upside of 5.89%. Given Starwood Property Trust’s stronger consensus rating and higher possible upside, equities analysts clearly believe Starwood Property Trust is more favorable than Highwoods Properties.

Institutional & Insider Ownership

49.8% of Starwood Property Trust shares are held by institutional investors. Comparatively, 96.3% of Highwoods Properties shares are held by institutional investors. 5.4% of Starwood Property Trust shares are held by insiders. Comparatively, 1.6% of Highwoods Properties shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 9.7%. Highwoods Properties pays an annual dividend of $2.00 per share and has a dividend yield of 6.9%. 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. Highwoods Properties pays out 210.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Starwood Property Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Starwood Property Trust has a beta of 1.69, indicating that its share price is 69% more volatile than the S&P 500. Comparatively, Highwoods Properties has a beta of 1.24, indicating that its share price is 24% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Starwood Property Trust	18.82%	9.93%	1.00%
Highwoods Properties	12.37%	4.33%	1.70%

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Starwood Property Trust	$1.06 billion	6.35	$339.21 million	$1.17	17.00
Highwoods Properties	$825.86 million	3.78	$102.25 million	$0.95	30.53

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

Summary

Starwood Property Trust beats Highwoods Properties on 14 of the 17 factors compared between the two stocks.

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.

About Highwoods Properties

Highwoods Properties, Inc., headquartered in Raleigh, is a publicly-traded (NYSE:HIW), fully-integrated office real estate investment trust (REIT) that owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond and Tampa. Highwoods is in the work-placemaking business. We believe that by creating environments and experiences where the best and brightest can achieve together what they cannot apart, we can deliver greater value to our customers, their teammates and, in turn, our stakeholders.