Head to Head Survey: BrightSpire Capital (NYSE:BRSP) & Starwood Property Trust (NYSE:STWD)

BrightSpire Capital (NYSE:BRSP) and Starwood Property Trust (NYSE:STWD) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, risk, valuation and institutional ownership.

Analyst Recommendations

This is a breakdown of recent recommendations for BrightSpire Capital and Starwood Property Trust, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BrightSpire Capital	1	0	4	0	2.60
Starwood Property Trust	0	1	4	0	2.80

BrightSpire Capital presently has a consensus price target of $6.7917, suggesting a potential upside of 27.07%. Starwood Property Trust has a consensus price target of $21.70, suggesting a potential upside of 9.96%. Given BrightSpire Capital’s higher possible upside, research analysts plainly believe BrightSpire Capital is more favorable than Starwood Property Trust.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
BrightSpire Capital	-16.92%	7.74%	2.21%
Starwood Property Trust	20.58%	8.72%	0.94%

Dividends

BrightSpire Capital pays an annual dividend of $0.64 per share and has a dividend yield of 12.0%. Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 9.7%. BrightSpire Capital pays out -290.9% of its earnings in the form of a dividend. Starwood Property Trust pays out 176.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. BrightSpire Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

BrightSpire Capital has a beta of 1.52, suggesting that its stock price is 52% more volatile than the S&P 500. Comparatively, Starwood Property Trust has a beta of 1.26, suggesting that its stock price is 26% more volatile than the S&P 500.

Earnings and Valuation

This table compares BrightSpire Capital and Starwood Property Trust”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BrightSpire Capital	$244.77 million	2.84	-$131.98 million	($0.22)	-24.30
Starwood Property Trust	$1.95 billion	3.72	$359.93 million	$1.09	18.10

Starwood Property Trust has higher revenue and earnings than BrightSpire Capital. BrightSpire Capital 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.

Insider and Institutional Ownership

56.6% of BrightSpire Capital shares are owned by institutional investors. Comparatively, 49.8% of Starwood Property Trust shares are owned by institutional investors. 2.1% of BrightSpire Capital shares are owned by company insiders. Comparatively, 5.9% of Starwood Property Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Starwood Property Trust beats BrightSpire Capital on 9 of the 15 factors compared between the two stocks.

About BrightSpire Capital

BrightSpire Capital, Inc. operates as a commercial real estate (CRE) credit real estate investment trust in the United States and Europe. The company operates through Senior and Mezzanine Loans and Preferred Equity; Net Leased and Other Real Estate; and Corporate and Other segments. It focuses on originating, acquiring, financing, and managing a diversified portfolio of CRE debt investments consisting of first mortgage loans, senior loans, debt securities, mezzanine loans, and preferred equity investments, as well as net leased properties. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Colony Credit Real Estate, Inc. and changed its name to BrightSpire Capital, Inc. in June 2021. BrightSpire Capital, Inc. was incorporated in 2017 and is headquartered in New York, New York.

About Starwood Property Trust

Starwood Property Trust, Inc. operates as a real estate investment trust (REIT) in the United States and internationally. The company operates through Commercial and Residential Lending, Infrastructure Lending, Property, and Investing and Servicing segments. The Commercial and Residential Lending segment originates, acquires, finances, and manages commercial first mortgages, non-agency residential mortgages, subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (CMBS), and residential mortgage-backed securities, as well as other real estate and real estate-related debt investments, include distressed or non-performing loans. The Infrastructure lending segment originates, acquires, finances, and manages infrastructure debt investments. The Property segment engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties, such as multifamily properties and commercial properties subject to net leases, that are held for investment. The Investing and Servicing segment manages and works out problem assets; acquires and manages unrated, investment grade, and non-investment grade rated CMBS comprising subordinated interests of securitization and re-securitization transactions; originates conduit loans for the primary purpose of selling these loans into securitization transactions; and acquires commercial real estate assets that include properties acquired from CMBS trusts. The company qualifies as a REIT for federal income tax purposes and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was incorporated in 2009 and is headquartered in Greenwich, Connecticut.