Is Starwood Property Trust, Inc. (STWD) Soaring Insider Trading Sending a Signal?

The exact reason why investors have been taking up Starwood Property Trust, Inc. (NYSE:STWD) stock at a frenetic pace might seem like a bit of a head-scratcher at the moment, but that’s only if you are buying the stock for the wrong reasons. On 11 February, the shares accumulated 0.02 points or 0.09 percent at $22.15 with a light trade volume of 1.562 million shares. After opening the session at $22.16, the shares went as high as $22.19 and as low as $22.01, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $6.12 billion and now has 276.1 million shares outstanding. Starwood Property Trust, Inc. (STWD) stock has gained 8 percent of market value in 21 trading days.

STWD stock has a trailing 3-year beta of 0.63, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was $1.46 a share in the trailing twelve months. The stock’s value has surged 12.38 percent year to date (YTD) against a rise of 12.32 percent in 12 month’s time. The company’s shares still trade -3.86 percent away from its 1-year high of $23.04 and 15.64 percent up from 52-week low of $19.16. The average consensus rating on the company is 2.1, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Starwood Property Trust, Inc. (STWD) will probably climb 8.04 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $25 price as 12-month high target. This represents a whopping 12.87 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $24, which represents a return potential of 8.35 percent when compared to the closing price of the stock of $22.15 on Monday, February 11. The lowest price target for the stock is $22.5 — slightly more than 1.58 percent from STWD’s current share price.

History has shown that shares in Starwood Property Trust, Inc. have gone up on 20 different earnings reaction days and are predicted to add 0.01 percent when the company reports upcoming earnings. Investors will get their next glimpse of STWD’s Q4 earnings on February 28. Analysts are forecasting revenue to climb 24.9 percent to $303M in the fiscal fourth quarter, while earnings are seen soaring by nearly -1.82 percent to $0.54 per share. It earned $0.57 per share, better than the $0.53, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $286M, better than the $277M analysts expected. Earnings are estimated to increase by 3.6 percent this year, 0.6 percent next year and continue to increase by 2.23 percent annually for the next 5 years.

The stock is currently hovering around the first support level of $22.04. Below this, the next support is placed in the zone of $21.94. Till the time, the STWD stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 62.33 on daily chart, which may remain a cause for concern. If the price breaks below $21.94 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $22.22 mark may result into a pull-back move towards $22.3 level.

Shares of Starwood Property Trust, Inc. (STWD) are trading at a P/E ratio of 15.17 times earnings reported for the past 12 months. The industry STWD operates in has an average P/E of 50.57. Its P/E ratio went as low as 10.36X and as high as 14.62 over the 5-year span.Further, it is sporting a 5.78 on the Price-to-Sales ratio. Compare this with the industry average P/S of 8.86. 53.6 percent is the gross profit margin for Starwood Property Trust, Inc. and operating margin sits at 13.9 percent. Along with this, the net profit margin is 36.2 percent.