Starwood Property Trust (NYSE:STWD) and Howard Hughes (NYSE:HHC) 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, risk, valuation and institutional ownership.
Valuation and Earnings
This table compares Starwood Property Trust and Howard Hughes’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Starwood Property Trust||$1.11 billion||6.27||$385.83 million||$2.11||11.72|
|Howard Hughes||$1.06 billion||5.33||$57.01 million||$1.32||99.72|
Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 7.8%. Howard Hughes does not pay a dividend. Starwood Property Trust pays out 91.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
This table compares Starwood Property Trust and Howard Hughes’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Starwood Property Trust||31.15%||10.51%||0.75%|
Insider and Institutional Ownership
62.7% of Starwood Property Trust shares are owned by institutional investors. Comparatively, 84.1% of Howard Hughes shares are owned by institutional investors. 3.1% of Starwood Property Trust shares are owned by company insiders. Comparatively, 7.5% of Howard Hughes shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
This is a breakdown of recent recommendations for Starwood Property Trust and Howard Hughes, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Starwood Property Trust||0||0||2||0||3.00|
Starwood Property Trust presently has a consensus price target of $26.00, suggesting a potential upside of 5.18%. Howard Hughes has a consensus price target of $159.00, suggesting a potential upside of 20.79%. Given Howard Hughes’ higher possible upside, analysts plainly believe Howard Hughes is more favorable than Starwood Property Trust.
Volatility and Risk
Starwood Property Trust has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500. Comparatively, Howard Hughes has a beta of 1.32, suggesting that its stock price is 32% more volatile than the S&P 500.
Starwood Property Trust beats Howard Hughes on 8 of the 15 factors compared between the two stocks.
Starwood Property Trust Company Profile
Starwood Property Trust, Inc. operates as a real estate investment trust (REIT) in the United States and Europe. It operates through three segments: Real Estate Lending, Real Estate Property, and Real Estate Investing and Servicing. The Real Estate Lending segment originates, acquires, finances, and manages commercial first mortgages, subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (CMBS), residential mortgage-backed securities, residential mortgage loans, and other real estate and real estate-related debt investments. The Real Estate Property segment acquires and manages equity interests in commercial real estate properties, including multi-family properties. The Real Estate Investing and Servicing segment manages and works out problem assets; acquires and manages unrated, investment grade, and non-investment grade rated CMBS, including 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. 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. Starwood Property Trust, Inc. was founded in 2009 and is headquartered in Greenwich, Connecticut.
Howard Hughes Company Profile
The Howard Hughes Corporation owns, manages, and develops commercial, residential, and hospitality operating properties in the United States. It operates through three segments: Operating Assets, Master Planned Communities, and Strategic Developments. The Operating Assets segment owns 15 retail, 28 office, 8 multi-family, and 4 hospitality properties, as well as 10 other operating assets and investments primarily located and around The Woodlands, Texas; Columbia, Maryland; New York, New York; Las Vegas, Nevada; and Honolulu, Hawai’i. The Master Planned Communities segment develops and sells residential and commercial land. This segment sells residential land designated for detached and attached single family homes ranging from entry-level to luxury homes; and commercial land parcels designated for retail, office, hospitality, and high density residential projects, as well as services and other for-profit activities, and parcels designated for use by government, schools, and other not-for-profit entities. As of December 31, 2018, this segment had 10,543 remaining saleable acres of land. The Strategic Development segment comprises residential condominium and commercial property projects. This segment consist of 29 development or redevelopment projects. The company was founded in 2010 and is headquartered in Dallas, Texas.
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