Starwood Property Trust (NYSE:STWD) and Whitestone REIT (NYSE:WSR) Critical Survey

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

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Starwood Property Trust	$1.06 billion	5.93	$339.21 million	$1.17	15.88
Whitestone REIT	$152.00 million	4.40	$19.18 million	$0.41	32.20

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

Risk & Volatility

Starwood Property Trust has a beta of 1.69, suggesting that its share price is 69% more volatile than the S&P 500. Comparatively, Whitestone REIT has a beta of 1.27, suggesting that its share price is 27% more volatile than the S&P 500.

Institutional & Insider Ownership

49.8% of Starwood Property Trust shares are held by institutional investors. Comparatively, 69.5% of Whitestone REIT shares are held by institutional investors. 5.4% of Starwood Property Trust shares are held by company insiders. Comparatively, 5.5% of Whitestone REIT shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Starwood Property Trust and Whitestone REIT’s 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%
Whitestone REIT	13.97%	4.98%	1.88%

Analyst Recommendations

This is a summary of recent ratings and price targets for Starwood Property Trust and Whitestone REIT, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Starwood Property Trust	0	3	5	1	2.78
Whitestone REIT	0	1	3	0	2.75

Starwood Property Trust currently has a consensus price target of $22.25, indicating a potential upside of 19.75%. Whitestone REIT has a consensus price target of $15.67, indicating a potential upside of 18.69%. Given Starwood Property Trust’s stronger consensus rating and higher possible upside, research analysts clearly believe Starwood Property Trust is more favorable than Whitestone REIT.

Dividends

Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 10.3%. Whitestone REIT pays an annual dividend of $0.54 per share and has a dividend yield of 4.1%. 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. Whitestone REIT pays out 131.7% 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 Whitestone REIT on 12 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 Whitestone REIT

Whitestone REIT (NYSE: WSR) is a community-centered real estate investment trust (REIT) that acquires, owns, operates, and develops open-air, retail centers located in some of the fastest growing markets in the country: Phoenix, Austin, Dallas-Fort Worth, Houston and San Antonio. Our centers are convenience focused: merchandised with a mix of service-oriented tenants providing food (restaurants and grocers), self-care (health and fitness), services (financial and logistics), education and entertainment to the surrounding communities. The Company believes its strong community connections and deep tenant relationships are key to the success of its current centers and its acquisition strategy.