Starwood Property Trust (NYSE:STWD) & DigitalBridge Group (NYSE:DBRG) Critical Comparison

DigitalBridge Group (NYSE:DBRG) and Starwood Property Trust (NYSE:STWD) are both mid-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, earnings, valuation, profitability and dividends.

Earnings & Valuation

This table compares DigitalBridge Group and Starwood Property Trust”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DigitalBridge Group	$374.45 million	7.54	$141.87 million	$0.45	34.28
Starwood Property Trust	$829.47 million	7.70	$411.54 million	$1.16	14.85

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for DigitalBridge Group and Starwood Property Trust, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DigitalBridge Group	1	7	1	0	2.00
Starwood Property Trust	0	4	3	0	2.43

DigitalBridge Group currently has a consensus target price of $16.00, indicating a potential upside of 3.73%. Starwood Property Trust has a consensus target price of $19.90, indicating a potential upside of 15.53%. Given Starwood Property Trust’s stronger consensus rating and higher possible upside, analysts clearly believe Starwood Property Trust is more favorable than DigitalBridge Group.

Institutional & Insider Ownership

92.7% of DigitalBridge Group shares are held by institutional investors. Comparatively, 49.8% of Starwood Property Trust shares are held by institutional investors. 3.6% of DigitalBridge Group shares are held by company insiders. Comparatively, 5.8% of Starwood Property Trust shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
DigitalBridge Group	N/A	5.51%	2.64%
Starwood Property Trust	22.32%	8.16%	0.91%

Dividends

DigitalBridge Group pays an annual dividend of $0.04 per share and has a dividend yield of 0.3%. Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 11.1%. DigitalBridge Group pays out 8.9% of its earnings in the form of a dividend. Starwood Property Trust pays out 165.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility and Risk

DigitalBridge Group has a beta of 1.67, indicating that its stock price is 67% more volatile than the S&P 500. Comparatively, Starwood Property Trust has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500.

Summary

Starwood Property Trust beats DigitalBridge Group on 11 of the 16 factors compared between the two stocks.

About DigitalBridge Group

DigitalBridge is an infrastructure investment firm specializing in digital infrastructure assets. They provide services to institutional investors. They primarily invest in data centers, cell towers, fiber networks, small cells, and edge infrastructure. DigitalBridge Group, Inc. was founded in 1991 and is headquartered in Boca Raton, Florida with additional offices in Los Angles, California, and New York New York.

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.