KKR Real Estate Finance Trust (NASDAQ: KREF) and Apollo Commercial Real Estate Finance (NYSE:ARI) are both small-cap financials companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, dividends, risk, profitability, institutional ownership, valuation and analyst recommendations.

Analyst Ratings

This is a breakdown of recent ratings and target prices for KKR Real Estate Finance Trust and Apollo Commercial Real Estate Finance, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
KKR Real Estate Finance Trust 0 3 0 0 2.00
Apollo Commercial Real Estate Finance 0 4 1 0 2.20

KKR Real Estate Finance Trust presently has a consensus target price of $22.75, suggesting a potential upside of 6.41%. Apollo Commercial Real Estate Finance has a consensus target price of $18.50, suggesting a potential upside of 1.59%. Given KKR Real Estate Finance Trust’s higher probable upside, equities analysts clearly believe KKR Real Estate Finance Trust is more favorable than Apollo Commercial Real Estate Finance.

Institutional and Insider Ownership

64.9% of Apollo Commercial Real Estate Finance shares are held by institutional investors. 0.6% of Apollo Commercial Real Estate Finance shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares KKR Real Estate Finance Trust and Apollo Commercial Real Estate Finance’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
KKR Real Estate Finance Trust $59.48 million 19.31 N/A N/A N/A
Apollo Commercial Real Estate Finance $221.93 million 8.65 $223.53 million $2.12 8.59

Apollo Commercial Real Estate Finance has higher revenue and earnings than KKR Real Estate Finance Trust.

Profitability

This table compares KKR Real Estate Finance Trust and Apollo Commercial Real Estate Finance’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
KKR Real Estate Finance Trust 64.81% 6.60% 0.87%
Apollo Commercial Real Estate Finance 93.54% 9.59% 5.20%

Dividends

Apollo Commercial Real Estate Finance pays an annual dividend of $1.84 per share and has a dividend yield of 10.1%. KKR Real Estate Finance Trust does not pay a dividend. Apollo Commercial Real Estate Finance pays out 86.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Apollo Commercial Real Estate Finance has increased its dividend for 2 consecutive years.

Summary

Apollo Commercial Real Estate Finance beats KKR Real Estate Finance Trust on 10 of the 14 factors compared between the two stocks.

KKR Real Estate Finance Trust Company Profile

KKR Real Estate Finance Trust Inc is a real estate finance company that focuses primarily on originating and acquiring senior mortgage loans secured by commercial real estate assets (CRE). KKR manages investments across multiple asset classes, including private equity, real estate, energy, infrastructure, credit and hedge funds. The Company’s investment strategy is to originate or acquire senior mortgage loans collateralized by institutional-quality CRE assets. Its target assets also include mezzanine loans, preferred equity and other debt-oriented instruments. The Company’s investment objective is capital preservation and generating attractive risk-adjusted returns for its stockholders over the long term, primarily through dividends.

Apollo Commercial Real Estate Finance Company Profile

Apollo Commercial Real Estate Finance, Inc. is a real estate investment trust. The Company primarily originates, acquires, invests in and manages performing commercial first mortgage loans, subordinate financings, commercial mortgage-backed securities (CMBS) and other commercial real estate-related debt investments. The Company targets investments that are secured by institutional quality real estate. The Company’s principal business objective is to make investments in its target assets in order to provide attractive risk adjusted returns to its stockholders over the long term, primarily through dividends and secondarily through capital appreciation. The Company is externally managed and advised by ACREFI Management, LLC.

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