Investment Thesis
Starwood Property Trust exhibits critical financial distress with an interest coverage ratio of 0.1x, indicating operating income cannot service debt obligations. Declining revenue and net income coupled with severe negative free cash flow of -$784.9M and minimal returns on assets (0.1%) and equity (0.8%) reflect a deteriorating business model unsustainable at current capital expenditure levels.
Strengths
- Positive operating cash flow of $93.6M demonstrates core business generates cash from operations
- Moderate debt-to-equity ratio of 0.35x indicates controlled leverage relative to asset base
- EPS growth of 4.5% YoY despite net income decline suggests active share repurchase program
Risks
- Critical interest coverage ratio of 0.1x - operating income fundamentally insufficient to cover debt service requirements
- Severe negative free cash flow of -$784.9M with $290.3M cash position unsustainable at current burn rate
- Revenue declining 5.3% and net income declining 7.1% YoY with abysmal returns on assets (0.1%) and equity (0.8%) indicating deteriorating operational efficiency
Key Metrics to Watch
- Interest coverage ratio - must reach minimum 1.5x for debt sustainability
- Free cash flow stabilization - current -$784.9M trajectory indicates structural insolvency risk
- Revenue trends and return on assets improvement - currently generating minimal economic value from $62.1B asset base
Financial Metrics
Revenue
512.5M
Net Income
51.9M
EPS (Diluted)
$0.13
Free Cash Flow
-784.9M
Total Assets
62.1B
Cash
290.3M
Profitability Ratios
Gross Margin
N/A
Operating Margin
10.4%
Net Margin
10.1%
ROE
0.8%
ROA
0.1%
FCF Margin
-153.2%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.35x
Debt/Assets
88.2%
Interest Coverage
0.05x
Long-term Debt
2.3B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-10T07:48:43.530828 |
Data as of: 2026-03-31 |
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