Comparing Starwood Property Trust (STWD) & New Residential Investment (NRZ)
Starwood Property Trust (NYSE: STWD) and New Residential Investment (NYSE:NRZ) are both mid-cap financials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, profitability, institutional ownership, valuation, earnings, analyst recommendations and dividends.
This table compares Starwood Property Trust and New Residential Investment’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Starwood Property Trust||45.55%||12.57%||0.88%|
|New Residential Investment||63.01%||18.73%||3.98%|
This is a summary of current recommendations for Starwood Property Trust and New Residential Investment, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Starwood Property Trust||0||0||2||0||3.00|
|New Residential Investment||0||0||6||0||3.00|
Starwood Property Trust currently has a consensus target price of $24.00, indicating a potential upside of 17.53%. New Residential Investment has a consensus target price of $18.88, indicating a potential upside of 15.30%. Given Starwood Property Trust’s higher possible upside, analysts plainly believe Starwood Property Trust is more favorable than New Residential Investment.
Valuation & Earnings
This table compares Starwood Property Trust and New Residential Investment’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||$879.89 million||6.07||$365.18 million||$1.55||13.17|
|New Residential Investment||$1.52 billion||3.62||$957.53 million||$3.12||5.25|
New Residential Investment has higher revenue and earnings than Starwood Property Trust. New Residential Investment is trading at a lower price-to-earnings ratio than Starwood Property Trust, indicating that it is currently the more affordable of the two stocks.
Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 9.4%. New Residential Investment pays an annual dividend of $2.00 per share and has a dividend yield of 12.2%. Starwood Property Trust pays out 123.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. New Residential Investment pays out 64.1% of its earnings in the form of a dividend. Starwood Property Trust has increased its dividend for 4 consecutive years. New Residential Investment is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk and Volatility
Starwood Property Trust has a beta of 0.21, suggesting that its stock price is 79% less volatile than the S&P 500. Comparatively, New Residential Investment has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500.
Institutional & Insider Ownership
68.8% of Starwood Property Trust shares are owned by institutional investors. Comparatively, 48.8% of New Residential Investment shares are owned by institutional investors. 2.4% of Starwood Property Trust shares are owned by insiders. Comparatively, 4.0% of New Residential Investment shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
New Residential Investment beats Starwood Property Trust on 11 of the 16 factors compared between the two stocks.
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.
New Residential Investment Company Profile
New Residential Investment Corp. is a real estate investment trust (REIT). The Company focuses on investing in, and managing, investments related to residential real estate. The Company’s segments include investments in excess mortgage servicing rights (Excess MSRs); investments in mortgage servicing rights (MSRs); investments in servicer advances; investments in real estate securities; investments in residential mortgage loans; investments in consumer loans, and corporate. Its portfolio includes mortgage servicing related assets, residential mortgage backed securities (RMBS), residential mortgage loans and other investments. The Company’s servicing related assets include its investments in Excess MSRs, MSRs and servicer advances. The Company invests in agency RMBS and non-agency RMBS. The Company’s other investments consist of consumer loans.
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