Analyzing Essential Properties Realty Trust (NYSE:EPRT) & Starwood Property Trust (NYSE:STWD)

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

Institutional and Insider Ownership

94.0% of Essential Properties Realty Trust shares are held by institutional investors. Comparatively, 60.8% of Starwood Property Trust shares are held by institutional investors. 2.1% of Essential Properties Realty Trust shares are held by insiders. Comparatively, 3.1% of Starwood Property Trust shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility and Risk

Essential Properties Realty Trust has a beta of 0.39, meaning that its share price is 61% less volatile than the S&P 500. Comparatively, Starwood Property Trust has a beta of 0.55, meaning that its share price is 45% less volatile than the S&P 500.

Dividends

Essential Properties Realty Trust pays an annual dividend of $0.92 per share and has a dividend yield of 3.4%. Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 7.6%. Starwood Property Trust pays out 91.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Essential Properties Realty Trust has increased its dividend for 1 consecutive years.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Essential Properties Realty Trust and Starwood Property Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Essential Properties Realty Trust 1 4 8 0 2.54
Starwood Property Trust 0 0 4 0 3.00

Essential Properties Realty Trust currently has a consensus price target of $21.88, indicating a potential downside of 19.17%. Starwood Property Trust has a consensus price target of $26.25, indicating a potential upside of 3.92%. Given Starwood Property Trust’s stronger consensus rating and higher possible upside, analysts plainly believe Starwood Property Trust is more favorable than Essential Properties Realty Trust.

Earnings and Valuation

This table compares Essential Properties Realty Trust and Starwood Property Trust’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Essential Properties Realty Trust $96.22 million 25.87 $15.61 million N/A N/A
Starwood Property Trust $1.11 billion 6.42 $385.83 million $2.11 11.97

Starwood Property Trust has higher revenue and earnings than Essential Properties Realty Trust.

Profitability

This table compares Essential Properties Realty Trust and Starwood Property Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Essential Properties Realty Trust 25.70% 3.33% 2.07%
Starwood Property Trust 34.61% 10.49% 0.72%

Summary

Starwood Property Trust beats Essential Properties Realty Trust on 9 of the 16 factors compared between the two stocks.

About Essential Properties Realty Trust

Essential Properties Realty Trust, Inc., a real estate company, acquires, owns, and manages single-tenant properties in the United States. The company leases its properties to middle-market companies, such as restaurants, car washes, automotive services, medical services, convenience stores, entertainment, early childhood education, and health and fitness on a long-term basis. As of December 31, 2018, it had a portfolio of 677 properties. The company qualifies as a real estate investment trust for federal income tax purposes. It generally 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 founded in 2016 and is based in Princeton, New Jersey.

About Starwood Property Trust

Starwood Property Trust, Inc. operates as a real estate investment trust (REIT) in the United States and Europe. It operates through three segments: Real Estate Lending, Real Estate Property, and Real Estate Investing and Servicing. The Real Estate Lending segment originates, acquires, finances, and manages commercial first mortgages, subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (CMBS), residential mortgage-backed securities, residential mortgage loans, and other real estate and real estate-related debt investments. The Real Estate Property segment acquires and manages equity interests in commercial real estate properties, including multi-family properties. The Real Estate Investing and Servicing segment manages and works out problem assets; acquires and manages unrated, investment grade, and non-investment grade rated CMBS, including 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. 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. Starwood Property Trust, Inc. was founded in 2009 and is headquartered in Greenwich, Connecticut.

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