Starwood Property Trust (STWD): Evaluating Valuation Following $1 Billion in Senior Note Issuances and Revenue Pressures

Starwood Property Trust (STWD) just completed its second large debt offering in a week, raising a total of more than $1 billion through unsecured senior notes. This move comes as the company is working to manage pressure from declining revenue and net interest income.

See our latest analysis for Starwood Property Trust.

Looking at the bigger picture, Starwood Property Trust’s back-to-back debt offerings are playing out against a backdrop of fading momentum. The stock’s 1-month share price return is down 9.2%, and its 1-year total shareholder return is just shy of flat despite impressive multi-year gains. While recent steps to shore up capital hint at growth ambitions and greater financial flexibility, investors have been cautious this year as revenue and interest income headwinds persist.

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But are these recent moves paving the way for a rebound in Starwood Property Trust’s share price, or has the market already factored in both the headwinds and the potential for future growth, making a buying opportunity less clear?

Most Popular Narrative: 16.1% Undervalued

Starwood Property Trust’s current share price of $18.33 sits notably below the most widely followed fair value estimate of $21.86. This sets the narrative stage for bold growth assumptions and sector tailwinds, which play a crucial role in supporting the valuation outlook.

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 discover what makes this fair value so compelling? The calculation leans heavily on rapid growth in both revenue and earnings, plus a future profit multiple that is higher than the industry average. See which numbers underpin the bullish outlook and why the narrative expects Starwood to outpace its peers over the next few years.

Result: Fair Value of $21.86 (UNDERVALUED)

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

However, stubborn credit risks and ongoing challenges in parts of the commercial real estate loan book could still disrupt Starwood’s expected path to earnings stability.

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

Build Your Own Starwood Property Trust Narrative

If you see Starwood’s story differently or want a hands-on look at the numbers, you can easily create your own perspective in just a few minutes. 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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