Starwood Property Trust, Inc. (NYSE: STWD)

Sector: Real Estate Industry: REIT - Mortgage CIK: 0001465128
Market Cap 6.55 Bn
P/B 0.95
P/E 17.88
P/S 3.63
ROIC (Qtr) 3.97
Div Yield % 10.32
Rev 1y % (Qtr) 1.95
Total Debt (Qtr) 21.43 Bn
Debt/Equity (Qtr) 3.12

About

Starwood Property Trust, Inc. (STWD) is a Maryland corporation that operates as a real estate investment trust (REIT) in the United States, Europe, and Australia. This company is externally managed and advised by SPT Management, LLC, a subsidiary of Starwood Capital Group, a privately-held private equity firm founded and controlled by Barry Sternlicht. STWD's primary business activities revolve around originating, acquiring, financing, and managing mortgage loans and other real estate investments. The company's operations are divided into four main...

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Price action

Investment thesis

Bull case

  • Operating cash flow of 784.68M provides exceptional 22.24x coverage of minority interest expenses 35.28M, showing strong core operations.
  • Operating cash flow of 784.68M provides strong 12.41x coverage of stock compensation 63.24M, indicating sustainable incentive practices.
  • Strong tangible asset base of 61.74B provides 2.88x coverage of total debt 21.43B, indicating robust asset backing and low credit risk.
  • Strong operating cash flow of 784.68M provides 3.92x coverage of SG&A expenses 200.18M, showing efficient operational cost management.
  • Robust free cash flow of 774.79M exceeds capital expenditure of 9.89M by 78.34x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 784.68M barely covers its investment activities of (2.74B), with a coverage ratio of -0.29, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 784.68M provides thin coverage of dividend payments of (653.43M) with a -1.20 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 539.11M provide limited coverage of acquisition spending of (810.43M), which is -0.67x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • R&D investment of 0 represents just 0x of SG&A expenses of 200.18M, indicating potential underinvestment in innovation relative to administrative overhead.
  • Cash position of 539.11M provides only 0.43x coverage of interest expenses of 1.25B, indicating potential refinancing risks in a rising rate environment.

Peer comparison

Companies in the REIT - Mortgage
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NLY Annaly Capital Management Inc 13.98 Bn 10.42 8.17 107.02 Bn
2 AGNC AGNC Investment Corp. 11.44 Bn 16.65 30.74 95.01 Bn
3 STWD Starwood Property Trust, Inc. 6.55 Bn 17.88 3.63 21.43 Bn
4 RITM Rithm Capital Corp. 5.78 Bn 7.43 1.16 34.97 Bn
5 BXMT Blackstone Mortgage Trust, Inc. 3.36 Bn 31.37 6.62 15.46 Bn
6 ARR Armour Residential REIT, Inc. 1.83 Bn 34.78 15.64 16.56 Bn
7 DX Dynex Capital Inc 1.59 Bn 9.04 6.88 11.75 Bn
8 ABR Arbor Realty Trust Inc 1.50 Bn 9.84 2.84 10.40 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.41 0.83
EV to Cash from Ops. EV/CFO 32.41 -102.96
EV to Debt EV to Debt 1.19 1.31
EV to EBIT EV/EBIT 15.55 -260.73
EV to EBITDA EV/EBITDA 18.97 -16.37
EV to Free Cash Flow [EV/FCF] EV/FCF 32.83 3.47
EV to Market Cap EV to Market Cap 4.01 9.18
EV to Revenue EV/Rev 14.08 26.77
Price to Book Value [P/B] P/B 0.92 0.68
Price to Earnings [P/E] P/E 17.32 -4.85
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.56 -0.55
Dividend Payout Ratio % Div Payout % (Qtr) 184.60 29.47
Dividend per Basic Share Div per Share (Qtr) 1.92 1.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 91.00 57.60
Interest Coverage Int. cover (Qtr) 1.30 -0.17
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -104.87 37.60
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 5.68 24.22
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 4.53
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -4.06 17.83
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -7.94 9.86
EBIT Growth (1y) % EBIT 1y % (Qtr) -10.74 20.98
EBT Growth (1y) % EBT 1y % (Qtr) -10.15 11.17
EPS Growth (1y) % EPS 1y % (Qtr) -11.86 59.25
FCF Growth (1y) % FCF 1y % (Qtr) 36.90 59.63
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -11.04 20.65
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.03 0.04
Cash Payout Ratio Cash Payout (Qtr) 0.82 0.83
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.00
Debt to Equity Ratio Debt/Equity (Qtr) 3.12 5.05
Interest Cover Ratio Int Coverage (Qtr) 1.30 -0.17
Times Interest Earned Times Interest Earned (Qtr) 1.30 -0.17
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 94.10 137.11
EBIT Margin % EBIT Margin % (Qtr) 90.58 142.19
EBT Margin % EBT Margin % (Qtr) 21.15 129.16
Gross Margin % Gross Margin % (Qtr) 92.00 117.97
Net Profit Margin % Net Margin % (Qtr) 20.30 125.89