Agree Realty (NYSE:ADC) and Starwood Property Trust (NYSE:STWD) are both mid-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, dividends, analyst recommendations, valuation and earnings.
Volatility and Risk
Agree Realty has a beta of -0.03, suggesting that its share price is 103% less volatile than the S&P 500. Comparatively, Starwood Property Trust has a beta of 0.55, suggesting that its share price is 45% less volatile than the S&P 500.
This table compares Agree Realty and Starwood Property Trust’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Agree Realty||$148.20 million||20.80||$58.17 million||$2.85||25.51|
|Starwood Property Trust||$1.11 billion||6.26||$385.83 million||$2.11||11.67|
Starwood Property Trust has higher revenue and earnings than Agree Realty. Starwood Property Trust is trading at a lower price-to-earnings ratio than Agree Realty, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
60.8% of Starwood Property Trust shares are held by institutional investors. 3.1% of Agree Realty shares are held by insiders. Comparatively, 3.1% of Starwood Property Trust shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
This table compares Agree Realty and Starwood Property Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Starwood Property Trust||34.61%||10.49%||0.72%|
Agree Realty pays an annual dividend of $2.28 per share and has a dividend yield of 3.1%. Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 7.8%. Agree Realty pays out 80.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. 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 is a breakdown of current recommendations and price targets for Agree Realty and Starwood Property Trust, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Starwood Property Trust||0||0||4||0||3.00|
Agree Realty currently has a consensus target price of $75.83, indicating a potential upside of 4.32%. Starwood Property Trust has a consensus target price of $25.88, indicating a potential upside of 5.10%. Given Starwood Property Trust’s stronger consensus rating and higher probable upside, analysts plainly believe Starwood Property Trust is more favorable than Agree Realty.
Starwood Property Trust beats Agree Realty on 8 of the 15 factors compared between the two stocks.
Agree Realty Company Profile
Agree Realty Corporation is a publicly traded real estate investment trust primarily engaged in the acquisition and development of properties net leased to industry-leading retail tenants. As of March 31, 2019, the Company owned and operated a portfolio of 694 properties, located in 46 states and containing approximately 11.9 million square feet of gross leasable space. The common stock of Agree Realty Corporation is listed on the New York Stock Exchange under the symbol "ADC".
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.
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