Apollo Commercial Real Estate Finance (NYSE: ARI) and Dynex Capital (NYSE:DX) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, analyst recommendations, institutional ownership and earnings.

Valuation & Earnings

This table compares Apollo Commercial Real Estate Finance and Dynex Capital’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Apollo Commercial Real Estate Finance $221.93 million 8.76 $223.53 million $2.12 8.70
Dynex Capital $105.39 million 3.44 $75.82 million $1.54 4.78

Apollo Commercial Real Estate Finance has higher revenue and earnings than Dynex Capital. Dynex Capital is trading at a lower price-to-earnings ratio than Apollo Commercial Real Estate Finance, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations and price targets for Apollo Commercial Real Estate Finance and Dynex Capital, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Apollo Commercial Real Estate Finance 0 3 1 0 2.25
Dynex Capital 0 2 1 0 2.33

Apollo Commercial Real Estate Finance presently has a consensus target price of $18.50, suggesting a potential upside of 0.33%. Dynex Capital has a consensus target price of $7.38, suggesting a potential upside of 0.20%. Given Apollo Commercial Real Estate Finance’s higher probable upside, equities research analysts plainly believe Apollo Commercial Real Estate Finance is more favorable than Dynex Capital.

Insider and Institutional Ownership

64.9% of Apollo Commercial Real Estate Finance shares are held by institutional investors. Comparatively, 44.4% of Dynex Capital shares are held by institutional investors. 0.6% of Apollo Commercial Real Estate Finance shares are held by company insiders. Comparatively, 7.1% of Dynex Capital shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Apollo Commercial Real Estate Finance 93.54% 9.59% 5.20%
Dynex Capital 93.54% 11.04% 1.25%

Dividends

Apollo Commercial Real Estate Finance pays an annual dividend of $1.84 per share and has a dividend yield of 10.0%. Dynex Capital pays an annual dividend of $0.72 per share and has a dividend yield of 9.8%. 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. Dynex Capital pays out 46.8% of its earnings in the form of a dividend. Dynex Capital has increased its dividend for 2 consecutive years.

Volatility & Risk

Apollo Commercial Real Estate Finance has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500. Comparatively, Dynex Capital has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500.

Summary

Apollo Commercial Real Estate Finance beats Dynex Capital on 9 of the 15 factors compared between the two stocks.

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.

Dynex Capital Company Profile

Dynex Capital, Inc. is an internally managed mortgage real estate investment trust, which invests in residential and commercial mortgage securities on a leveraged basis. The Company’s objective is to provide attractive risk-adjusted returns to its shareholders over the long term that is reflective of a leveraged fixed income portfolio with a focus on capital preservation. It seeks to provide returns to its shareholders through regular quarterly dividends and through capital appreciation. It invests in Agency and non-Agency mortgage-backed securities (MBS). MBS consists of residential MBS (RMBS), commercial MBS (CMBS) and CMBS interest-only securities. Agency MBS have a guaranty of principal payment by an agency of the United States Government or a government-sponsored entity (GSE), such as Fannie Mae and Freddie Mac.

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