Contrasting Starwood Property Trust (STWD) & Annaly Capital Management (NLY)
Starwood Property Trust (NYSE: STWD) and Annaly Capital Management (NYSE:NLY) are both mid-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, earnings, profitability, risk and dividends.
This table compares Starwood Property Trust and Annaly Capital Management’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Starwood Property Trust||52.28%||11.88%||0.79%|
|Annaly Capital Management||104.56%||11.59%||1.52%|
67.5% of Starwood Property Trust shares are held by institutional investors. Comparatively, 54.4% of Annaly Capital Management shares are held by institutional investors. 2.4% of Starwood Property Trust shares are held by company insiders. Comparatively, 0.4% of Annaly Capital Management shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Risk and Volatility
Starwood Property Trust has a beta of 0.52, suggesting that its stock price is 48% less volatile than the S&P 500. Comparatively, Annaly Capital Management has a beta of 0.23, suggesting that its stock price is 77% less volatile than the S&P 500.
Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 8.8%. Annaly Capital Management pays an annual dividend of $1.20 per share and has a dividend yield of 10.2%. Starwood Property Trust pays out 116.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Annaly Capital Management pays out 48.0% of its earnings in the form of a dividend. Annaly Capital Management is clearly the better dividend stock, given its higher yield and lower payout ratio.
Valuation & Earnings
This table compares Starwood Property Trust and Annaly Capital Management’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Starwood Property Trust||$784.67 million||7.22||$365.18 million||$1.65||13.15|
|Annaly Capital Management||$2.21 billion||6.19||$1.43 billion||$2.50||4.72|
Annaly Capital Management has higher revenue and earnings than Starwood Property Trust. Annaly Capital Management 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.
This is a summary of recent ratings and target prices for Starwood Property Trust and Annaly Capital Management, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Starwood Property Trust||0||1||2||0||2.67|
|Annaly Capital Management||1||3||2||0||2.17|
Starwood Property Trust presently has a consensus price target of $24.00, indicating a potential upside of 10.60%. Annaly Capital Management has a consensus price target of $11.08, indicating a potential downside of 6.07%. Given Starwood Property Trust’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Starwood Property Trust is more favorable than Annaly Capital Management.
Starwood Property Trust beats Annaly Capital Management on 8 of the 15 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.
Annaly Capital Management Company Profile
Annaly Capital Management, Inc. is a mortgage real estate investment trust (REIT). The Company owns a portfolio of real estate related investments. Its investment groups primarily consist of Agency, which invests primarily in various types of Agency mortgage-backed securities and related derivatives to hedge these investments; Residential credit, which invests primarily in non-Agency mortgage-backed assets within securitized products and residential mortgage loan markets; Commercial real estate, which originates and invests in commercial mortgage loans, securities, and other commercial real estate investments, and Middle market, which provides customized debt financing to middle-market businesses. Its business operations consist of Annaly Commercial Real Estate Group, Inc., which is its subsidiary that specializes in originating or acquiring, financing and managing commercial loans and other commercial real estate debt; Annaly Middle Market Lending LLC, and RCap Securities, Inc.
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