STWD vs ARI

For growth investors, Apollo Commercial Real Estate Finance, Inc.

(ARI) is the stronger pick with 1. 3% revenue growth year-over-year, versus -7. 9% for Starwood Property Trust, Inc. (STWD). Apollo Commercial Real Estate Finance, Inc. (ARI) offers the better valuation at 13. 5x trailing P/E (12. 7x forward), making it the more compelling value choice. Analysts rate Starwood Property Trust, Inc. (STWD) a "Buy" — based on 21 analyst ratings — the highest consensus in this comparison. The "better buy" depends entirely on your goals: growth investors should weight revenue trajectory, value investors should weight P/E and PEG, and income investors should weight dividend yield and streak.

On trailing P/E, Apollo Commercial Real Estate Finance, Inc.

(ARI) is the cheapest at 13. 5x versus Starwood Property Trust, Inc. at 15. 0x. On forward P/E, Starwood Property Trust, Inc. is actually cheaper at 10. 2x — notably different from the trailing picture, reflecting expected earnings growth. The PEG ratio (P/E divided by earnings growth rate) is the most growth-adjusted single valuation metric: Apollo Commercial Real Estate Finance, Inc. wins at 0. 09x versus Starwood Property Trust, Inc. 's 10. 06x — a PEG below 1. 0 traditionally signals the market is underpricing earnings growth.

Over the past 5 years, Apollo Commercial Real Estate Finance, Inc.

(ARI) delivered a total return of +12. 6%, compared to +11. 3% for Starwood Property Trust, Inc. (STWD). Over 10 years, the gap is even starker: STWD returned +90. 8% versus ARI's +62. 9%. Past returns do not guarantee future results, and the stock with the higher historical return may already have its best growth priced in.

By beta (market sensitivity over 5 years), Starwood Property Trust, Inc.

(STWD) is the lower-risk stock at 0. 45β versus Apollo Commercial Real Estate Finance, Inc. 's 0. 60β — meaning ARI is approximately 32% more volatile than STWD relative to the S&P 500. On balance sheet safety, Starwood Property Trust, Inc. (STWD) carries a lower debt/equity ratio of 3% versus 4% for Apollo Commercial Real Estate Finance, Inc. — giving it more financial flexibility in a downturn.

By revenue growth (latest reported year), Apollo Commercial Real Estate Finance, Inc.

(ARI) is pulling ahead at 1. 3% versus -7. 9% for Starwood Property Trust, Inc. (STWD). On earnings-per-share growth, the picture is similar: Apollo Commercial Real Estate Finance, Inc. grew EPS 183. 5% year-over-year, compared to 8. 9% for Starwood Property Trust, Inc.. Over a 3-year CAGR, STWD leads at 6. 6% annualised revenue growth. Higher growth typically commands a higher valuation multiple — check whether the premium P/E or P/S is justified by the growth rate using the PEG ratio.

Starwood Property Trust, Inc.

(STWD) is the more profitable company, earning 21. 9% net margin versus 17. 8% for Apollo Commercial Real Estate Finance, Inc. — meaning it keeps 21. 9% of every revenue dollar as bottom-line profit. Operating margin tells a similar story: STWD leads at 76. 2% versus 65. 4% for ARI. At the gross margin level — before operating expenses — STWD leads at 80. 5%, reflecting greater pricing power or product mix advantage. Stronger margins indicate durable pricing power, lower cost of revenue, or higher mix of software/services. They are one of the clearest signs of business quality.

The PEG ratio (forward P/E divided by expected earnings growth rate) is the most precise measure of undervaluation relative to growth potential.

By this metric, Apollo Commercial Real Estate Finance, Inc. (ARI) is the more undervalued stock at a PEG of 0. 09x versus Starwood Property Trust, Inc. 's 10. 06x. A PEG below 1. 0 is traditionally considered the threshold for growth-adjusted undervaluation. On forward earnings alone, Starwood Property Trust, Inc. (STWD) trades at 10. 2x forward P/E versus 12. 7x for Apollo Commercial Real Estate Finance, Inc. — 2. 5x cheaper on a one-year earnings basis. Analyst consensus price targets imply the most upside for ARI: 9. 6% to $12. 00.

In this comparison, ARI (9.

3% yield) pays a dividend. STWD does not pay a meaningful dividend and should not be held primarily for income.

For long-horizon retirement investors, Apollo Commercial Real Estate Finance, Inc.

(ARI) is the stronger choice — it scores higher on the combination of lower volatility, dividend reliability, and long-term compounding (low volatility (β 0. 60), 9. 3% yield). Both have compounded well over 10 years (ARI: +62. 9%, STWD: +90. 8%), confirming both are viable long-term holds — but the lower-volatility option typically results in less emotional selling during corrections. Retirement portfolios generally favour predictability over maximum returns. Consult a financial advisor before making allocation decisions.

Both stocks operate in the Real Estate sector, making this a peer-level intra-sector comparison — the same macro tailwinds and headwinds will affect both.

ARI pays a dividend while STWD does not, making them suitable for different income and tax situations. These fundamental differences mean investors should not choose between them on a single metric — the "better stock" depends entirely on which of these characteristics aligns with your investment strategy.