Head-To-Head Comparison: Starwood Property Trust (NYSE:STWD) and Ladder Capital (NYSE:LADR)

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

Volatility & Risk

Ladder Capital has a beta of 0.96, meaning that its share price is 4% less volatile than the S&P 500. Comparatively, Starwood Property Trust has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Ladder Capital and Starwood Property Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ladder Capital	0	3	4	0	2.57
Starwood Property Trust	1	1	5	1	2.75

Ladder Capital presently has a consensus price target of $12.29, suggesting a potential upside of 34.27%. Starwood Property Trust has a consensus price target of $18.70, suggesting a potential upside of 53.40%. Given Starwood Property Trust’s stronger consensus rating and higher possible upside, analysts plainly believe Starwood Property Trust is more favorable than Ladder Capital.

Dividends

Ladder Capital pays an annual dividend of $0.92 per share and has a dividend yield of 10.1%. Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 15.8%. Ladder Capital pays out 115.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Starwood Property Trust pays out 325.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings and Valuation

This table compares Ladder Capital and Starwood Property Trust”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ladder Capital	$390.29 million	2.95	$64.18 million	$0.80	11.44
Starwood Property Trust	$1.84 billion	2.45	$411.54 million	$0.59	20.66

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

62.3% of Ladder Capital shares are held by institutional investors. Comparatively, 49.8% of Starwood Property Trust shares are held by institutional investors. 12.6% of Ladder Capital shares are held by company insiders. Comparatively, 5.8% of Starwood Property Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Ladder Capital	23.70%	6.98%	1.81%
Starwood Property Trust	11.35%	7.85%	0.89%

Summary

Starwood Property Trust beats Ladder Capital on 10 of the 17 factors compared between the two stocks.

About Ladder Capital

Ladder Capital Corp operates as an internally-managed real estate investment trust in the United States. It operates through three segments: Loans, Securities, and Real Estate. The Loans segment originates conduit first mortgage loans that are secured by cash-flowing commercial real estate; and originates and invests in balance sheet first mortgage loans secured by commercial real estate properties that are undergoing transition, including lease-up, sell-out, and renovation or repositioning. It also invests in note purchase financings, subordinated debt, mezzanine debt, and other structured finance products related to commercial real estate. The Securities segment invests in commercial mortgage-backed securities, U.S. treasury and agency, corporate bonds, and equity securities. The Real Estate segment owns and invests in a portfolio of commercial and residential real estate properties, such as leased properties, office buildings, student housing portfolios, hotels, industrial buildings, shopping center, and condominium units. 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 founded in 2008 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.