Apartment Income REIT (NYSE:AIRC – Get Rating) and Starwood Property Trust (NYSE:STWD – Get Rating) are both mid-cap 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.
Risk and Volatility
Apartment Income REIT has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500. Comparatively, Starwood Property Trust has a beta of 1.57, suggesting that its stock price is 57% more volatile than the S&P 500.
This table compares Apartment Income REIT and Starwood Property Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Apartment Income REIT||116.89%||39.95%||13.91%|
|Starwood Property Trust||59.50%||10.23%||0.86%|
Valuation and Earnings
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Apartment Income REIT||$773.72 million||6.57||$904.43 million||$5.83||5.85|
|Starwood Property Trust||$1.46 billion||3.55||$871.47 million||$2.74||6.11|
Apartment Income REIT has higher earnings, but lower revenue than Starwood Property Trust. Apartment Income REIT 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 breakdown of current recommendations and price targets for Apartment Income REIT and Starwood Property Trust, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Apartment Income REIT||0||4||4||0||2.50|
|Starwood Property Trust||0||1||4||1||3.00|
Apartment Income REIT currently has a consensus price target of $42.33, suggesting a potential upside of 24.22%. Starwood Property Trust has a consensus price target of $25.07, suggesting a potential upside of 49.77%. Given Starwood Property Trust’s stronger consensus rating and higher possible upside, analysts plainly believe Starwood Property Trust is more favorable than Apartment Income REIT.
Institutional and Insider Ownership
99.4% of Apartment Income REIT shares are owned by institutional investors. Comparatively, 43.8% of Starwood Property Trust shares are owned by institutional investors. 0.9% of Apartment Income REIT shares are owned by insiders. Comparatively, 5.0% of Starwood Property 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.
Apartment Income REIT pays an annual dividend of $1.80 per share and has a dividend yield of 5.3%. Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 11.5%. Apartment Income REIT pays out 30.9% of its earnings in the form of a dividend. Starwood Property Trust pays out 70.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
About Apartment Income REIT
AIR is a real estate investment trust focused on the ownership and management of quality apartment communities located in the largest markets in the United States. AIR is one of the country's largest owners and operators of apartments, with 99 communities in 12 states and the District of Columbia. AIR common shares are traded on the New York Stock Exchange under the ticker symbol AIRC, and are included in the S&P 400. For more information about AIR, please visit our website at www.aircommunities.com.
About Starwood Property Trust
Starwood Property Trust, Inc. engages in originating, acquiring, financing and managing commercial mortgage loans and other commercial real estate debt and equity investments. It operates through the following segments: Real Estate Commercial and Residential Lending, Infrastructure Lending, Real Estate Property, and Real Estate Investing and Servicing. The Real Estate Commercial and Residential Lending segment includes commercial first and subordinated mortgages, mezzanine loans, preferred equity, certain residential mortgage loans, and other real estate debt investments. The Infrastructure Lending segment is involved primarily in originating, acquiring, financing and managing infrastructure debt investments. The Real Estate Property segment consists of acquisition and managing equity interests in stabilized commercial real estate properties, such as multi-family properties, that are held for investment. The Real Estate Investing and Servicing segment provides businesses that manage and work out problem assets, investment businesses that acquire and manage unrated, investment grade and non-investment grade, mortgage loan businesses which originates conduit loans for the purpose of
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