Starwood Property Trust (NYSE:STWD – Get Free Report) and Service Properties Trust (NASDAQ:SVC – Get Free Report) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, institutional ownership, valuation, dividends, risk, analyst recommendations and earnings.
Volatility & Risk
Starwood Property Trust has a beta of 1.69, indicating that its stock price is 69% more volatile than the S&P 500. Comparatively, Service Properties Trust has a beta of 2.19, indicating that its stock price is 119% more volatile than the S&P 500.
Analyst Recommendations
This is a summary of current ratings and recommmendations for Starwood Property Trust and Service Properties Trust, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Starwood Property Trust | 0 | 3 | 5 | 1 | 2.78 |
| Service Properties Trust | 1 | 0 | 1 | 0 | 2.00 |
Dividends
Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 10.0%. Service Properties Trust pays an annual dividend of $0.04 per share and has a dividend yield of 1.4%. Starwood Property Trust pays out 164.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Service Properties Trust pays out -2.7% of its earnings in the form of a dividend.
Earnings & Valuation
This table compares Starwood Property Trust and Service Properties Trust”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Starwood Property Trust | $2.05 billion | 3.17 | $339.21 million | $1.17 | 16.48 |
| Service Properties Trust | $1.87 billion | 0.25 | -$32.78 million | ($1.47) | -1.95 |
Starwood Property Trust has higher revenue and earnings than Service Properties Trust. Service Properties Trust 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.
Institutional & Insider Ownership
49.8% of Starwood Property Trust shares are held by institutional investors. Comparatively, 77.6% of Service Properties Trust shares are held by institutional investors. 5.4% of Starwood Property Trust shares are held by insiders. Comparatively, 1.4% of Service Properties Trust shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Profitability
This table compares Starwood Property Trust and Service Properties Trust’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% |
| Service Properties Trust | -12.87% | -22.67% | -3.37% |
Summary
Starwood Property Trust beats Service Properties Trust on 12 of the 16 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 Service Properties Trust
Service Properties Trust (Nasdaq: SVC) is a real estate investment trust with over $11 billion invested in two asset categories: hotels and service-focused retail net lease properties. As of December 31, 2023, SVC owned 221 hotels with over 37,000 guest rooms throughout the United States and in Puerto Rico and Canada, the majority of which are extended stay and select service. As of December 31, 2023, SVC also owned 752 service-focused retail net lease properties totaling approximately 13.3 million square feet throughout the United States. SVC is managed by The RMR Group (Nasdaq: RMR), a leading U.S. alternative asset management company with over $41 billion in assets under management as of December 31, 2023, and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. SVC is headquartered in Newton, MA.
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