Starwood Property Trust (STWD): Assessing Valuation After Q3 Revenue and Income Declines Matched Forecasts

Starwood Property Trust (STWD) just released its third quarter results, showing a slight dip in both revenue and net income compared to last year. The update comes after a stretch of softer performance and missed targets. However, the numbers matched what many were expecting.

See our latest analysis for Starwood Property Trust.

After a tough stretch earlier in the year, Starwood Property Trust’s share price has found some footing, holding near $18.42 and showing resilience even as performance has softened. Short-term share price return trends have been mixed, but its one-year total shareholder return of 3.9% and impressive 66.8% over five years reinforce that momentum has ebbed; however, long-term investors have still fared well.

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With mixed earnings trends and the current share price sitting nearly 19% below the average analyst target, the key question now is whether the recent softness offers a true bargain or if the market is already factoring in future growth.

Most Popular Narrative: 15.7% Undervalued

With Starwood Property Trust closing at $18.42 and the most watched narrative placing fair value closer to $21.86, there is a clear expectation of upside. This gap sets the context for a more optimistic outlook, shaped by anticipated growth beyond recent softness.

The acquisition and ramp-up of the net lease portfolio (Fundamental Income), combined with ongoing infrastructure lending growth, position Starwood to generate high-quality, durable earnings streams across a more diversified asset base. This supports both net margin expansion and greater earnings consistency.

Read the complete narrative.

Want to know why the experts see more in Starwood than meets the eye? Their fair value hinges on a bold growth path, one that assumes expanding margins and a rapid top-line surge. Ready to see what ambitious numbers underpin this projection? Unpack the hidden story driving this valuation.

Result: Fair Value of $21.86 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent credit risk from nonaccrual assets and unexpected losses on recent acquisitions could challenge the bullish outlook if recovery values are lower than anticipated.

Find out about the key risks to this Starwood Property Trust narrative.

Another View: Market Ratio Tells a Different Story

Looking at how Starwood Property Trust is priced compared to industry standards, the current price-to-earnings ratio of 18.7x stands out against the US Mortgage REITs industry average of 12.6x, the peer average of 15x, and a fair ratio of 13.7x. This gap suggests the stock is relatively expensive using this yardstick, putting more pressure on future performance to justify the premium. Does this risk outweigh the upside case?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Starwood Property Trust Narrative

If you think the story runs deeper, or want to dig into the figures on your own terms, you can craft a custom outlook in just a few minutes, and Do it your way.

A great starting point for your Starwood Property Trust research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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