Comparing Digital Realty Trust (NYSE:DLR) and Starwood Property Trust (NYSE:STWD)

Digital Realty Trust (NYSE:DLR) and Starwood Property Trust (NYSE:STWD) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, earnings, risk, profitability, institutional ownership, dividends and valuation.

Earnings & Valuation

This table compares Digital Realty 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
Digital Realty Trust	$5.48 billion	8.46	$948.84 million	$3.60	41.21
Starwood Property Trust	$2.05 billion	2.98	$339.21 million	$1.39	13.91

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

Analyst Ratings

This is a summary of current recommendations and price targets for Digital Realty Trust and Starwood Property Trust, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Digital Realty Trust	2	7	7	1	2.41
Starwood Property Trust	0	3	4	1	2.75

Digital Realty Trust currently has a consensus target price of $144.65, indicating a potential downside of 2.50%. Starwood Property Trust has a consensus target price of $21.88, indicating a potential upside of 13.11%. Given Starwood Property Trust’s stronger consensus rating and higher possible upside, analysts plainly believe Starwood Property Trust is more favorable than Digital Realty Trust.

Insider and Institutional Ownership

99.7% of Digital Realty Trust shares are held by institutional investors. Comparatively, 49.8% of Starwood Property Trust shares are held by institutional investors. 0.2% of Digital Realty 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, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Digital Realty Trust	21.24%	6.37%	2.72%
Starwood Property Trust	21.20%	9.99%	0.96%

Dividends

Digital Realty Trust pays an annual dividend of $4.88 per share and has a dividend yield of 3.3%. Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 9.9%. Digital Realty Trust pays out 135.6% 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 and Risk

Digital Realty Trust has a beta of 0.57, indicating that its stock price is 43% less volatile than the S&P 500. Comparatively, Starwood Property Trust has a beta of 1.68, indicating that its stock price is 68% more volatile than the S&P 500.

Summary

Digital Realty Trust beats Starwood Property Trust on 10 of the 16 factors compared between the two stocks.

About Digital Realty Trust

Digital Realty brings companies and data together by delivering the full spectrum of data center, colocation, and interconnection solutions. PlatformDIGITAL, the company's global data center platform, provides customers with a secure data meeting place and a proven Pervasive Datacenter Architecture (PDx) solution methodology for powering innovation and efficiently managing Data Gravity challenges. Digital Realty gives its customers access to the connected data communities that matter to them with a global data center footprint of 300+ facilities in 50+ metros across 25+ countries on six continents.

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.