iStar Financial (NYSE: STAR) and Capital Trust (NYSE:BXMT) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, earnings, valuation, institutional ownership, analyst recommendations, dividends and profitability.

Volatility & Risk

iStar Financial has a beta of 1.29, indicating that its share price is 29% more volatile than the S&P 500. Comparatively, Capital Trust has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500.

Earnings & Valuation

This table compares iStar Financial and Capital Trust’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
iStar Financial $626.30 million 1.33 $243.53 million $1.83 6.30
Capital Trust $298.97 million 9.84 $220.95 million $2.33 13.31

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

Profitability

This table compares iStar Financial and Capital Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
iStar Financial 32.82% 22.21% 4.79%
Capital Trust 55.05% 8.76% 2.43%

Dividends

Capital Trust pays an annual dividend of $2.48 per share and has a dividend yield of 8.0%. iStar Financial does not pay a dividend. Capital Trust pays out 106.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Capital Trust has raised its dividend for 3 consecutive years.

Analyst Recommendations

This is a summary of current ratings and recommmendations for iStar Financial and Capital Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
iStar Financial 0 2 0 0 2.00
Capital Trust 0 3 3 0 2.50

Capital Trust has a consensus target price of $33.50, indicating a potential upside of 7.99%. Given Capital Trust’s stronger consensus rating and higher possible upside, analysts clearly believe Capital Trust is more favorable than iStar Financial.

Institutional and Insider Ownership

83.4% of iStar Financial shares are held by institutional investors. Comparatively, 61.9% of Capital Trust shares are held by institutional investors. 4.4% of iStar Financial shares are held by company insiders. Comparatively, 0.9% of Capital Trust shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Capital Trust beats iStar Financial on 9 of the 17 factors compared between the two stocks.

About iStar Financial

iStar Inc. finances, invests in and develops real estate and real estate related projects as part of its integrated investment platform. The Company’s four business segments are Real Estate Finance, Net Lease, Operating Properties, and Land and Development. The Real Estate Finance portfolio consists of senior and mezzanine real estate loans that may be either fixed-rate or variable-rate. The Net Lease portfolio consists of properties owned by the Company and leased to single tenants, where the properties are subject to long-term leases. The Operating Properties portfolio consists of commercial and residential properties, which represent a pool of assets across a range of geographies and property types. The Land and Development portfolio consists of land entitled for master planned communities, as well as waterfront and urban infill land parcels located throughout the United States. Its Land and Development projects include Great Oaks, Sage Scottsdale, Naples Reserve and Coney Island.

About Capital Trust

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.

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