Reviewing Starwood Property Trust (NYSE:STWD) and W. P. Carey (NYSE:WPC)

Starwood Property Trust (NYSE:STWD) and W. P. Carey (NYSE:WPC) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, dividends, institutional ownership, risk and earnings.

Analyst Ratings

This is a summary of current ratings and recommmendations for Starwood Property Trust and W. P. Carey, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Starwood Property Trust	0	3	4	1	2.75
W. P. Carey	0	7	2	0	2.22

Starwood Property Trust presently has a consensus target price of $22.36, suggesting a potential upside of 11.95%. W. P. Carey has a consensus target price of $61.25, suggesting a potential upside of 1.66%. Given Starwood Property Trust’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Starwood Property Trust is more favorable than W. P. Carey.

Earnings and Valuation

This table compares Starwood Property Trust and W. P. Carey”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Starwood Property Trust	$2.05 billion	3.09	$339.21 million	$1.39	14.37
W. P. Carey	$1.64 billion	8.04	$708.33 million	$2.63	22.91

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

Dividends

Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 9.6%. W. P. Carey pays an annual dividend of $3.50 per share and has a dividend yield of 5.8%. Starwood Property Trust pays out 138.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. W. P. Carey pays out 133.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk & Volatility

Starwood Property Trust has a beta of 1.7, meaning that its share price is 70% more volatile than the S&P 500. Comparatively, W. P. Carey has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500.

Profitability

This table compares Starwood Property Trust and W. P. Carey’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Starwood Property Trust	17.05%	10.03%	0.98%
W. P. Carey	34.83%	6.50%	3.18%

Institutional and Insider Ownership

49.8% of Starwood Property Trust shares are owned by institutional investors. Comparatively, 73.7% of W. P. Carey shares are owned by institutional investors. 5.4% of Starwood Property Trust shares are owned by company insiders. Comparatively, 1.1% of W. P. Carey shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Starwood Property Trust beats W. P. Carey on 9 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 W. P. Carey

W. P. Carey ranks among the largest net lease REITs with a well-diversified portfolio of high-quality, operationally critical commercial real estate, which includes 1,424 net lease properties covering approximately 173 million square feet and a portfolio of 89 self-storage operating properties as of December 31, 2023. With offices in New York, London, Amsterdam and Dallas, the company remains focused on investing primarily in single-tenant, industrial, warehouse and retail properties located in the U.S. and Northern and Western Europe, under long-term net leases with built-in rent escalations.