Critical Review: Starwood Property Trust (NYSE:STWD) versus Sunrise Realty Trust (NASDAQ:SUNS)

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

Analyst Recommendations

This is a breakdown of current ratings and target prices for Starwood Property Trust and Sunrise Realty Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Starwood Property Trust	1	1	5	1	2.75
Sunrise Realty Trust	1	3	0	0	1.75

Starwood Property Trust currently has a consensus target price of $17.90, indicating a potential upside of 51.37%. Sunrise Realty Trust has a consensus target price of $6.50, indicating a potential downside of 9.60%. Given Starwood Property Trust’s stronger consensus rating and higher probable upside, research analysts plainly believe Starwood Property Trust is more favorable than Sunrise Realty Trust.

Dividends

Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 16.2%. Sunrise Realty Trust pays an annual dividend of $1.29 per share and has a dividend yield of 17.9%. Starwood Property Trust pays out -282.4% of its earnings in the form of a dividend. Sunrise Realty Trust pays out 146.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation and Earnings

This table compares Starwood Property Trust and Sunrise Realty Trust”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Starwood Property Trust	$1.84 billion	2.33	$411.54 million	($0.68)	-17.39
Sunrise Realty Trust	$33.98 million	2.86	$12.14 million	$0.88	8.17

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

Risk & Volatility

Starwood Property Trust has a beta of 1.03, indicating that its share price is 3% more volatile than the S&P 500. Comparatively, Sunrise Realty Trust has a beta of 1, indicating that its share price has a similar volatility profile to the S&P 500.

Institutional & Insider Ownership

49.8% of Starwood Property Trust shares are owned by institutional investors. 5.8% of Starwood Property Trust shares are owned by company insiders. Comparatively, 28.5% of Sunrise Realty Trust shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Starwood Property Trust	-11.35%	7.77%	0.86%
Sunrise Realty Trust	49.15%	7.77%	4.37%

Summary

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

About Starwood Property Trust

Starwood Property Trust, Inc. is a real estate investment trust focused on commercial real estate finance and related investments. The company originates, acquires and manages commercial mortgage loans and other debt investments secured by commercial properties, and also invests in commercial real estate and infrastructure-related lending. Founded in 2009, Starwood Property Trust operates primarily in the United States and also conducts business in international markets, including Europe and Australia.

About Sunrise Realty Trust

Sunrise Realty Trust, Inc. is a real estate investment trust focused on commercial real estate finance. The company invests in and originates commercial real estate debt, seeking to generate income from loans and other investments secured by properties in the United States. Its investment activities are centered primarily on mortgage loans and other credit investments backed by commercial real estate. These investments may support the acquisition, refinancing, development, redevelopment or repositioning of properties, with the portfolio generally targeting opportunities in the middle-market commercial real estate sector.