Arbor Realty Trust (NYSE: ABR) and NorthStar Asset Management Group (NYSE:CLNS) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, dividends, institutional ownership, earnings, valuation and analyst recommendations.

Profitability

This table compares Arbor Realty Trust and NorthStar Asset Management Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arbor Realty Trust 54.47% 10.47% 2.48%
NorthStar Asset Management Group 7.95% 3.04% 1.37%

Analyst Ratings

This is a breakdown of current ratings for Arbor Realty Trust and NorthStar Asset Management Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arbor Realty Trust 0 1 1 0 2.50
NorthStar Asset Management Group 0 2 3 0 2.60

Arbor Realty Trust currently has a consensus target price of $8.88, indicating a potential upside of 10.11%. NorthStar Asset Management Group has a consensus target price of $16.81, indicating a potential upside of 27.17%. Given NorthStar Asset Management Group’s stronger consensus rating and higher probable upside, analysts plainly believe NorthStar Asset Management Group is more favorable than Arbor Realty Trust.

Valuation and Earnings

This table compares Arbor Realty Trust and NorthStar Asset Management Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Arbor Realty Trust $282.94 million 1.75 $68.71 million $1.12 7.20
NorthStar Asset Management Group $1.88 billion 3.88 $945.92 million $0.13 101.70

NorthStar Asset Management Group has higher revenue and earnings than Arbor Realty Trust. Arbor Realty Trust is trading at a lower price-to-earnings ratio than NorthStar Asset Management Group, indicating that it is currently the more affordable of the two stocks.

Dividends

Arbor Realty Trust pays an annual dividend of $0.72 per share and has a dividend yield of 8.9%. NorthStar Asset Management Group pays an annual dividend of $1.08 per share and has a dividend yield of 8.2%. Arbor Realty Trust pays out 64.3% of its earnings in the form of a dividend. NorthStar Asset Management Group pays out 830.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Arbor Realty Trust has raised its dividend for 5 consecutive years. Arbor Realty Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Arbor Realty Trust has a beta of 0.69, indicating that its stock price is 31% less volatile than the S&P 500. Comparatively, NorthStar Asset Management Group has a beta of 1.54, indicating that its stock price is 54% more volatile than the S&P 500.

Insider and Institutional Ownership

39.0% of Arbor Realty Trust shares are held by institutional investors. Comparatively, 84.7% of NorthStar Asset Management Group shares are held by institutional investors. 16.5% of Arbor Realty Trust shares are held by company insiders. Comparatively, 8.0% of NorthStar Asset Management Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

NorthStar Asset Management Group beats Arbor Realty Trust on 9 of the 17 factors compared between the two stocks.

Arbor Realty Trust Company Profile

Arbor Realty Trust, Inc. is a real estate investment trust. The Company invests in a portfolio of structured finance assets in the multifamily and commercial real estate markets, primarily consisting of bridge and mezzanine loans, including junior participating interests in first mortgages, preferred and direct equity. Its segments include Structured Business and Agency Business. In addition, the Company may also directly acquire real property and invest in real estate-related notes and certain mortgage-related securities. It focuses on investment types, such as Bridge Financing, Mezzanine Financing, Junior Participation Financing and Preferred Equity Investments. It offers bridge financing products to borrowers, typically seeking short-term capital to use in an acquisition of property. It offers mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction.

NorthStar Asset Management Group Company Profile

Colony NorthStar, Inc. is a diversified equity real estate investment trust (REIT). The Company combines a portfolio of real assets across the world, which are managed with a global real estate investment manager. The Company has property holdings in the healthcare, industrial and hospitality sectors, opportunistic equity and debt investments, and an embedded institutional and retail investment management business. In addition, the Company owns NorthStar Securities, LLC, a captive broker-dealer platform which raises capital in the retail market. The Company acquires, develops and operates industrial properties in metropolitan markets throughout the United States with a focus on light industrial buildings. The Company provides investment management services and offers investment products while serving as a fiduciary to a set of institutional and individual investors.

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