NEW YORK (TheStreet) -- Shares of Starwood Property Trust (STWD - Get Report) were falling 1.9% to $23.97 after-hours Tuesday after the real estate investment trust announced a public offering of common stock.
Starwood Property Trust announced it will offer 12 million shares of common stock in an underwritten public offering. The underwriters of the offering will have a 30-day option to buy up to 1.8 million additional shares.
The company said it plans to use the net proceeds from the offering to originate and purchase additional commercial mortgage loans and other target assets and investments. Some of the proceeds will be used to fund a portion of the company's pending acquisition of a portfolio of properties in Dublin, Ireland,
Starwood Property Trust said it may also use the proceeds from the offering for general corporate purposes, including the payment of liabilities and other working capital needs.
TheStreet Ratings team rates STARWOOD PROPERTY TRUST INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate STARWOOD PROPERTY TRUST INC (STWD) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, expanding profit margins, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 10.0%. Since the same quarter one year prior, revenues slightly increased by 1.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for STARWOOD PROPERTY TRUST INC is rather high; currently it is at 56.21%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 49.38% significantly outperformed against the industry average.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, STARWOOD PROPERTY TRUST INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: STWD Ratings Report