Starwood Property Trust (NYSE:STWD) & W. P. Carey (NYSE:WPC) Financial Analysis

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

Dividends

W. P. Carey pays an annual dividend of $3.50 per share and has a dividend yield of 5.9%. Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 9.7%. 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. 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.

Volatility & Risk

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

Valuation and Earnings

This table compares W. P. Carey and Starwood Property Trust”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
W. P. Carey	$1.64 billion	7.98	$708.33 million	$2.63	22.75
Starwood Property Trust	$974.89 million	6.40	$339.21 million	$1.39	14.20

W. P. Carey has higher revenue and 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.

Institutional and Insider Ownership

73.7% of W. P. Carey shares are held by institutional investors. Comparatively, 49.8% of Starwood Property Trust shares are held by institutional investors. 1.1% of W. P. Carey shares are held by insiders. Comparatively, 5.4% of Starwood Property Trust shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

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

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

Analyst Ratings

This is a breakdown of recent ratings for W. P. Carey and Starwood Property Trust, as reported by MarketBeat.

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

W. P. Carey presently has a consensus price target of $63.25, suggesting a potential upside of 5.73%. Starwood Property Trust has a consensus price target of $22.36, suggesting a potential upside of 13.26%. Given Starwood Property Trust’s stronger consensus rating and higher probable upside, analysts plainly believe Starwood Property Trust is more favorable than W. P. Carey.

Summary

W. P. Carey beats Starwood Property Trust on 9 of the 17 factors compared between the two stocks.

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.

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.