Starwood Property Trust (NYSE:STWD) vs. Equity Commonwealth (NYSE:EQC) Head-To-Head Analysis

Starwood Property Trust (NYSE:STWD) and Equity Commonwealth (NYSE:EQC) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, dividends, institutional ownership, profitability, earnings, analyst recommendations and risk.

Volatility and Risk

Starwood Property Trust has a beta of 1.34, indicating that its share price is 34% more volatile than the S&P 500. Comparatively, Equity Commonwealth has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Starwood Property Trust	18.82%	9.93%	1.00%
Equity Commonwealth	82.00%	2.09%	1.96%

Analyst Recommendations

This is a summary of recent recommendations for Starwood Property Trust and Equity Commonwealth, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Starwood Property Trust	0	2	5	1	2.88
Equity Commonwealth	0	0	0	0	0.00

Starwood Property Trust presently has a consensus price target of $22.07, indicating a potential upside of 25.68%. Given Starwood Property Trust’s stronger consensus rating and higher probable upside, equities analysts plainly believe Starwood Property Trust is more favorable than Equity Commonwealth.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Starwood Property Trust	$961.90 million	6.17	$339.21 million	$1.10	15.96
Equity Commonwealth	$58.43 million	2.93	$91.16 million	$0.39	4.09

Starwood Property Trust has higher revenue and earnings than Equity Commonwealth. Equity Commonwealth 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

49.8% of Starwood Property Trust shares are held by institutional investors. Comparatively, 96.0% of Equity Commonwealth shares are held by institutional investors. 5.4% of Starwood Property Trust shares are held by insiders. Comparatively, 2.1% of Equity Commonwealth shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Starwood Property Trust beats Equity Commonwealth on 12 of the 15 factors compared between the two stocks.

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.

About Equity Commonwealth

Equity Commonwealth (NYSE: EQC) is a Chicago based, internally managed and self-advised real estate investment trust (REIT) with commercial office properties in the United States. EQC's portfolio is comprised of four properties totaling 1.5 million square feet.