Head-To-Head Comparison: NexPoint Real Estate Finance (NYSE:NREF) versus Starwood Property Trust (NYSE:STWD)

Starwood Property Trust (NYSE:STWD) and NexPoint Real Estate Finance (NYSE:NREF) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, earnings, profitability and institutional ownership.

Profitability

This table compares Starwood Property Trust and NexPoint Real Estate Finance’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%
NexPoint Real Estate Finance	N/A	11.39%	0.58%

Analyst Ratings

This is a summary of current recommendations for Starwood Property Trust and NexPoint Real Estate Finance, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Starwood Property Trust	0	2	5	1	2.88
NexPoint Real Estate Finance	0	4	0	0	2.00

Starwood Property Trust presently has a consensus target price of $21.86, suggesting a potential upside of 17.74%. NexPoint Real Estate Finance has a consensus target price of $14.50, suggesting a potential upside of 4.20%. Given Starwood Property Trust’s stronger consensus rating and higher possible upside, research analysts clearly believe Starwood Property Trust is more favorable than NexPoint Real Estate Finance.

Dividends

Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 10.3%. NexPoint Real Estate Finance pays an annual dividend of $2.00 per share and has a dividend yield of 14.4%. Starwood Property Trust pays out 174.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NexPoint Real Estate Finance pays out 270.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility & Risk

Starwood Property Trust has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500. Comparatively, NexPoint Real Estate Finance has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500.

Institutional & Insider Ownership

49.8% of Starwood Property Trust shares are held by institutional investors. Comparatively, 67.8% of NexPoint Real Estate Finance shares are held by institutional investors. 5.4% of Starwood Property Trust shares are held by company insiders. Comparatively, 54.0% of NexPoint Real Estate Finance shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Starwood Property Trust and NexPoint Real Estate Finance”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Starwood Property Trust	$961.90 million	6.52	$339.21 million	$1.10	16.88
NexPoint Real Estate Finance	$29.20 million	8.41	$13.98 million	$0.74	18.80

Starwood Property Trust has higher revenue and earnings than NexPoint Real Estate Finance. Starwood Property Trust is trading at a lower price-to-earnings ratio than NexPoint Real Estate Finance, indicating that it is currently the more affordable of the two stocks.

Summary

Starwood Property Trust beats NexPoint Real Estate Finance on 11 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 NexPoint Real Estate Finance

NexPoint Real Estate Finance, Inc. operates as a commercial mortgage real estate investment trust in the United States. It focuses on originating, structuring, and investing in first-lien mortgage loans, mezzanine loans, preferred equity, convertible notes, multifamily properties, and common equity investments, as well as multifamily and single-family rental commercial mortgage-backed securities securitizations, multifamily structured credit risk notes, and mortgage-backed securities or target assets. The company has elected to be taxed as a real estate investment trust (REIT) and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. NexPoint Real Estate Finance, Inc. was incorporated in 2019 and is based in Dallas, Texas.