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Starwood Property Trust (STWD) has drawn attention after recent share performance data showed relatively flat moves over the past month, modest gains over the past 3 months, and a small positive 1 year total return.
See our latest analysis for Starwood Property Trust.
At a share price of US$18.07, Starwood Property Trust has moved slightly over the year, with a 0.79% 1-year total shareholder return and a stronger 30.10% total shareholder return over five years. This suggests momentum has been steadier over the longer term than in the past few months.
If this kind of income focused REIT has your attention, it could be a good moment to broaden your search and check out our list of 23 top founder-led companies as potential next ideas.
With Starwood Property Trust generating US$490.651m of revenue and US$357.818m of net income, plus a current price of US$18.07 against an analyst target of US$21.25, you have to ask: is there real value here, or is the market already pricing in future growth?
With Starwood Property Trust closing at $18.07 against a narrative fair value of $21.25, the most followed view sees a meaningful valuation gap built on specific growth and margin assumptions.
Acceleration in the institutionalization of real estate credit markets and tightening of traditional bank lending standards should drive more deal flow, allowing Starwood, as a well-capitalized large player, to originate more loans at attractive spreads, supporting higher revenue and improved net interest margins over time.
Curious what kind of revenue ramp, margin reset, and future earnings multiple are baked into that $21.25 figure? The full narrative spells out the growth runway, the assumed profitability step down, and the valuation premium that need to line up for this story to work.
Result: Fair Value of $21.25 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, that story can be challenged if commercial real estate credit losses rise, or if funding from capital markets becomes more expensive or harder to access.
Find out about the key risks to this Starwood Property Trust narrative.
Those fair value narratives point to upside, but the current P/E of 18.7x paints a tighter picture. It sits above both peers at 16x and the fair ratio of 14.4x. This suggests you are paying a richer price for each dollar of earnings. Is that premium comfort or risk for you?
