Starwood Property Trust (NYSE:STWD) versus Iron Mountain (NYSE:IRM) Critical Analysis

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Starwood Property Trust (NYSE:STWD) and Iron Mountain (NYSE:IRM) are both mid-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, valuation, analyst recommendations, institutional ownership, profitability, risk and earnings. Analyst Ratings This is a summary of recent ratings […]

Starwood Property Trust (NYSE:STWD) and Iron Mountain (NYSE:IRM) are both mid-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, valuation, analyst recommendations, institutional ownership, profitability, risk and earnings.

Analyst Ratings

This is a summary of recent ratings and target prices for Starwood Property Trust and Iron Mountain, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Starwood Property Trust 0 0 6 0 3.00
Iron Mountain 1 0 2 0 2.33

Starwood Property Trust currently has a consensus price target of $19.33, indicating a potential upside of 22.36%. Iron Mountain has a consensus price target of $31.00, indicating a potential upside of 9.35%. Given Starwood Property Trust’s stronger consensus rating and higher possible upside, analysts plainly believe Starwood Property Trust is more favorable than Iron Mountain.

Profitability

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

Net Margins Return on Equity Return on Assets
Starwood Property Trust 32.32% 11.07% 0.71%
Iron Mountain 4.82% 21.19% 1.96%

Valuation and Earnings

This table compares Starwood Property Trust and Iron Mountain’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Starwood Property Trust $1.20 billion 3.76 $509.66 million $1.71 9.24
Iron Mountain $4.26 billion 1.92 $267.38 million $2.29 12.38

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

Volatility and Risk

Starwood Property Trust has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500. Comparatively, Iron Mountain has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500.

Dividends

Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 12.2%. Iron Mountain pays an annual dividend of $2.47 per share and has a dividend yield of 8.7%. Starwood Property Trust pays out 112.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Iron Mountain pays out 107.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Starwood Property Trust has raised its dividend for 1 consecutive years and Iron Mountain has raised its dividend for 1 consecutive years.

Institutional and Insider Ownership

53.7% of Starwood Property Trust shares are held by institutional investors. Comparatively, 83.5% of Iron Mountain shares are held by institutional investors. 3.5% of Starwood Property Trust shares are held by insiders. Comparatively, 2.1% of Iron Mountain shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Starwood Property Trust beats Iron Mountain on 9 of the 16 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 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.

About Iron Mountain

Iron Mountain Incorporated (NYSE: IRM), founded in 1951, is the global leader for storage and information management services. Trusted by more than 225,000 organizations around the world, and with a real estate network of more than 85 million square feet across more than 1,400 facilities in approximately 50 countries, Iron Mountain stores and protects billions of valued assets, including critical business information, highly sensitive data, and cultural and historical artifacts. Providing solutions that include information management, digital transformation, secure storage, secure destruction, as well as data centers, cloud services and art storage and logistics, Iron Mountain helps customers lower cost and risk, comply with regulations, recover from disaster, and enable a more digital way of working.

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