Starwood Property Trust (NYSE: STWD) and PennyMac Mortgage Investment Trust (NYSE:PMT) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, earnings and analyst recommendations.
This is a breakdown of current recommendations and price targets for Starwood Property Trust and PennyMac Mortgage Investment Trust, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Starwood Property Trust||0||0||2||0||3.00|
|PennyMac Mortgage Investment Trust||0||2||1||0||2.33|
This table compares Starwood Property Trust and PennyMac Mortgage Investment Trust’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%|
|PennyMac Mortgage Investment Trust||36.07%||7.59%||1.75%|
Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 8.8%. PennyMac Mortgage Investment Trust pays an annual dividend of $1.88 per share and has a dividend yield of 11.3%. 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. PennyMac Mortgage Investment Trust pays out 132.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Institutional and Insider Ownership
67.4% of Starwood Property Trust shares are owned by institutional investors. Comparatively, 63.0% of PennyMac Mortgage Investment Trust shares are owned by institutional investors. 2.4% of Starwood Property Trust shares are owned by insiders. Comparatively, 2.1% of PennyMac Mortgage Investment Trust shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Valuation & Earnings
This table compares Starwood Property Trust and PennyMac Mortgage Investment Trust’s top-line 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||7.25||$365.18 million||$1.65||13.21|
|PennyMac Mortgage Investment Trust||$272.09 million||4.01||$75.81 million||$1.42||11.70|
Starwood Property Trust has higher revenue and earnings than PennyMac Mortgage Investment Trust. PennyMac Mortgage Investment Trust 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.
Risk and Volatility
Starwood Property Trust has a beta of 0.51, suggesting that its stock price is 49% less volatile than the S&P 500. Comparatively, PennyMac Mortgage Investment Trust has a beta of 0.52, suggesting that its stock price is 48% less volatile than the S&P 500.
Starwood Property Trust beats PennyMac Mortgage Investment Trust on 12 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.
PennyMac Mortgage Investment Trust Company Profile
PennyMac Mortgage Investment Trust is a specialty finance company that invests primarily in residential mortgage loans and mortgage-related assets. The Company conducts all of its operations, and makes all of its investments, through PennyMac Operating Partnership, L.P. (its Operating Partnership) and its subsidiaries. It operates through two segments: correspondent production and investment activities. Its investment activities segment represents the Company’s investments in mortgage-related assets. The correspondent production segment represents the Company’s operations aimed at serving as an intermediary between mortgage lenders and the capital markets by purchasing, pooling and reselling newly originated prime credit quality mortgage loans either directly or in the form of MBS, using the services of PNMAC Capital Management (the Manager or PCM) and PennyMac Loan Services, LLC (PLS), both indirect subsidiaries of PennyMac Financial Services, Inc. (PFSI or PennyMac).
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