Blackstone Mortgage Trust (NYSE: BXMT) and Starwood Property Trust (NYSE:STWD) are both mid-cap financials companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, earnings, profitability, analyst recommendations, risk, institutional ownership and dividends.

Valuation & Earnings

This table compares Blackstone Mortgage Trust and Starwood Property Trust’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Blackstone Mortgage Trust $313.70 million 10.08 $238.29 million $2.25 13.31
Starwood Property Trust $784.67 million 6.63 $365.18 million $1.66 12.00

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

Dividends

Blackstone Mortgage Trust pays an annual dividend of $2.48 per share and has a dividend yield of 8.3%. Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 9.6%. Blackstone Mortgage Trust pays out 110.2% 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 115.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Blackstone Mortgage Trust and Starwood Property Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Blackstone Mortgage Trust 0 3 4 0 2.57
Starwood Property Trust 0 0 2 0 3.00

Blackstone Mortgage Trust currently has a consensus price target of $33.25, suggesting a potential upside of 11.02%. Starwood Property Trust has a consensus price target of $24.00, suggesting a potential upside of 20.48%. Given Starwood Property Trust’s stronger consensus rating and higher probable upside, analysts plainly believe Starwood Property Trust is more favorable than Blackstone Mortgage Trust.

Volatility and Risk

Blackstone Mortgage Trust has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500. Comparatively, Starwood Property Trust has a beta of 0.22, meaning that its share price is 78% less volatile than the S&P 500.

Institutional and Insider Ownership

54.3% of Blackstone Mortgage Trust shares are held by institutional investors. Comparatively, 67.7% of Starwood Property Trust shares are held by institutional investors. 0.9% of Blackstone Mortgage Trust shares are held by insiders. Comparatively, 2.4% of Starwood Property Trust shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Blackstone Mortgage Trust 53.85% 8.63% 2.32%
Starwood Property Trust 52.28% 11.88% 0.79%

Blackstone Mortgage Trust Company Profile

Blackstone Mortgage Trust, Inc. is a holding company. The Company conducts its operations as a real estate investment trust for the United States federal income tax purposes. The Company originates and purchases senior loans collateralized by properties in North America and Europe. The Company’s business is focused on originating or acquiring senior, floating rate mortgage loans that are secured by a first priority mortgage on commercial real estate assets primarily in the office, lodging, retail, residential and industrial sectors. These investments may be in the form of whole loans or may also include pari passu participations within mortgage loans. It directly originates, co-originates and acquires debt instruments in conjunction with acquisitions, refinancings and recapitalizations of commercial real estate. The Company’s manager is BXMT Advisors L.L.C.

Starwood Property Trust Company Profile

Starwood Property Trust, Inc. is a real estate investment trust. The Company operates through three business segments: Real estate lending (the Lending Segment), which engages primarily in originating, acquiring, financing and managing commercial first mortgages, subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (CMBS), residential mortgage-backed securities, and other real estate and real estate-related debt investments; Real estate investing and servicing (the Investing and Servicing Segment), which includes a servicing business in the United States that manages and works out problem assets; an investment business that selectively acquires and manages unrated, investment grade and non-investment grade rated CMBS, and a mortgage loan business, and Real estate property (the Property Segment), which engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties.

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