Starwood Property Trust (STWD Quick QuoteSTWD - Free Report) is scheduled to report third-quarter 2023 results on Nov 8, before the opening bell. The company’s results will likely reflect a year-over-year decline in earnings per share (EPS), while revenues are expected to rise.

In the last reported quarter, the mortgage real estate investment trust (mREIT), focused on commercial property mortgages and commercial real estate, posted distributable earnings of 49 cents surpassing the Zacks Consensus Estimate of 48 cents.

Over the trailing four quarters, the company outpaced the Zacks Consensus Estimate for earnings on one occasion and missed in the other three. It delivered a surprise of 0.52%, on average, during this period.

Let’s see how things have shaped up prior to this announcement.

Factors at Play

The mREIT sector was under pressure in the third quarter due to high volatility in the fixed-income markets. The widening of the Agency mortgage-backed securities (MBS) spreads due to ongoing supply, elevated volatility, and MBS runoff from Federal Reserve and bank portfolios is expected to have affected the tangible book values of the industry players.

As for STWD, the company does not seem to be immune from a challenging macro backdrop. Book value is expected to have deteriorated in the third quarter due to higher rates.

Moreover, the U.S. commercial real estate market continued to be affected by the deterioration in the office real estate space. Also, the commercial MBS delinquency rate increased in the third quarter. This is expected to have affected STWD’s performance in the to-be-reported quarter.

The Zacks Consensus Estimate for third-quarter 2023 rental revenues is pegged at $31.31 million, suggesting a 4.92% year-over-year fall.  

Overall, the Zacks Consensus Estimate for third-quarter 2023 revenues is pegged at $524 million, suggesting a 34.2% year-over-year rise.  

Also, the company’s activities during the quarter were inadequate to gain analyst confidence. Consequently, the Zacks Consensus Estimate for third-quarter 2023 EPS has been revised 4.1% downward to 47 cents in a month’s time. Also, it indicates a year-over-year fall of 7.8%.

Here is What Our Quantitative Model Predicts:

Starwood Property does not have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Starwood Property is -0.70%.

Zacks Rank: Starwood Property currently carries a Zacks Rank of 4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other mREITs

Annaly Capital Management, Inc. (NLY Quick QuoteNLY - Free Report) reported third-quarter earnings available for distribution per average share of 66 cents, which surpassed the Zacks Consensus Estimate of 65 cents. The figure declined from $1.06 in the year-ago quarter.

NLY registered year-over-year declines in book value per share and margin, while the average yield on interest-earning assets improved.

AGNC Investment Corp.’s (AGNC Quick QuoteAGNC - Free Report) third-quarter 2023 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization costs) of 65 cents beat the Zacks Consensus Estimate of 57 cents. However, the bottom line declined from 84 cents in the prior-year quarter.

AGNC’s adjusted net interest and dollar roll income (excluding estimated "catch-up" premium amortization costs) of $499 million moved down from $514 million in the quarter-ago period.