Critical Review: Starwood Property Trust (NYSE:STWD) vs. Altisource Portfolio Solutions (NASDAQ:ASPS)

Altisource Portfolio Solutions (NASDAQ:ASPS) and Starwood Property Trust (NYSE:STWD) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, earnings, profitability and risk.

Profitability

This table compares Altisource Portfolio Solutions and Starwood Property Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Altisource Portfolio Solutions	0.04%	N/A	-3.73%
Starwood Property Trust	20.28%	8.41%	0.92%

Valuation & Earnings

This table compares Altisource Portfolio Solutions and Starwood Property Trust”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Altisource Portfolio Solutions	$160.13 million	0.37	-$35.64 million	($1.94)	-2.79
Starwood Property Trust	$1.95 billion	3.44	$359.93 million	$1.05	17.21

Starwood Property Trust has higher revenue and earnings than Altisource Portfolio Solutions. Altisource Portfolio Solutions 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.

Analyst Ratings

This is a breakdown of current recommendations for Altisource Portfolio Solutions and Starwood Property Trust, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Altisource Portfolio Solutions	1	0	0	0	1.00
Starwood Property Trust	0	3	3	0	2.50

Starwood Property Trust has a consensus price target of $20.63, suggesting a potential upside of 14.11%. Given Starwood Property Trust’s stronger consensus rating and higher possible upside, analysts plainly believe Starwood Property Trust is more favorable than Altisource Portfolio Solutions.

Institutional and Insider Ownership

41.4% of Altisource Portfolio Solutions shares are owned by institutional investors. Comparatively, 49.8% of Starwood Property Trust shares are owned by institutional investors. 2.3% of Altisource Portfolio Solutions shares are owned by insiders. Comparatively, 5.9% of Starwood Property Trust shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Altisource Portfolio Solutions has a beta of 0.16, indicating that its stock price is 84% less volatile than the S&P 500. Comparatively, Starwood Property Trust has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500.

Summary

Starwood Property Trust beats Altisource Portfolio Solutions on 14 of the 14 factors compared between the two stocks.

About Altisource Portfolio Solutions

Altisource Portfolio Solutions S.A. operates as an integrated service provider and marketplace for the real estate and mortgage industries in the United States and internationally. It operates through Servicer and Real Estate, and Origination segments. The Servicer and Real Estate segment offers property preservation, inspection, title insurance and settlement, real estate valuation, foreclosure trustee, and residential and commercial construction inspection and risk mitigation services. This segment provides Hubzu, an online real estate auction platform, as well as real estate auction, real estate brokerage, and asset management services; Equator, a software-as-a-service technology to manage real estate owned, short sales, foreclosure, bankruptcy, and eviction processes; a vendor invoicing and payment system; RentRange, a single and multi-family rental data, analytics, and rent-based valuation solution; REALSynergy, a commercial loan servicing platform; and NestRange, an automated residential valuation model and analytics solution. The Origination segment offers loan fulfillment, certification and certification insurance services, management services. In addition, it provides Lendors One Loan Automation, a marketplace to order services and a tool to automate components of the loan manufacturing process; TrelixAI, a technology to manage the workflow and automate components of the loan fulfillment, pre and post close quality, and service transfer processes; and ADMS, a document management and data analytics delivery platform. The company serves financial institutions, government-sponsored enterprises, banks, asset managers, servicers, investors, property management firms, real estate brokerages, insurance companies, mortgage bankers, originators, and correspondent and private money lenders. Altisource Portfolio Solutions S.A. was incorporated in 1999 and is headquartered in Luxembourg City, Luxembourg.

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.