Comparing Starwood Property Trust (NYSE:STWD) & Orion Office REIT (NYSE:ONL)

Starwood Property Trust (NYSE:STWD) and Orion Office REIT (NYSE:ONL) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, dividends, profitability, earnings and risk.

Profitability

This table compares Starwood Property Trust and Orion Office REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Starwood Property Trust	16.55%	9.38%	0.87%
Orion Office REIT	-29.38%	-6.20%	-3.82%

Institutional and Insider Ownership

49.8% of Starwood Property Trust shares are owned by institutional investors. Comparatively, 80.0% of Orion Office REIT shares are owned by institutional investors. 5.4% of Starwood Property Trust shares are owned by company insiders. Comparatively, 0.2% of Orion Office REIT shares are owned 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.

Volatility & Risk

Starwood Property Trust has a beta of 1.65, suggesting that its share price is 65% more volatile than the S&P 500. Comparatively, Orion Office REIT has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Starwood Property Trust and Orion Office REIT, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Starwood Property Trust	0	3	4	0	2.57
Orion Office REIT	0	0	0	0	N/A

Starwood Property Trust currently has a consensus target price of $21.71, indicating a potential upside of 13.57%. Given Starwood Property Trust’s higher possible upside, equities analysts plainly believe Starwood Property Trust is more favorable than Orion Office REIT.

Dividends

Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 10.0%. Orion Office REIT pays an annual dividend of $0.40 per share and has a dividend yield of 12.3%. Starwood Property Trust pays out 179.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Orion Office REIT pays out -39.2% of its earnings in the form of a dividend. Orion Office REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Starwood Property Trust and Orion Office REIT’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Starwood Property Trust	$2.05 billion	2.93	$339.21 million	$1.07	17.86
Orion Office REIT	$195.04 million	0.93	-$57.30 million	($1.02)	-3.18

Starwood Property Trust has higher revenue and earnings than Orion Office REIT. Orion Office REIT 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.

Summary

Starwood Property Trust beats Orion Office REIT on 12 of the 15 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 Orion Office REIT

Orion Office REIT specializes in the ownership, acquisition and management of a diversified portfolio of mission-critical and corporate headquarters office buildings in high-quality suburban markets across the U.S. The portfolio is leased primarily on a single-tenant net lease basis to creditworthy tenants. The company's team of experienced industry leaders employs a proven, cycle-tested investment evaluation framework which serves as the lens through which capital allocation decisions are made for the current portfolio and future acquisitions.