Ares Commercial Real Estate Corporation (NYSE: ACRE) is one of 37 publicly-traded companies in the “Mortgage REITs” industry, but how does it weigh in compared to its peers? We will compare Ares Commercial Real Estate Corporation to related businesses based on the strength of its dividends, earnings, valuation, analyst recommendations, profitability, institutional ownership and risk.

Analyst Ratings

This is a summary of current recommendations and price targets for Ares Commercial Real Estate Corporation and its peers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ares Commercial Real Estate Corporation 1 2 3 0 2.33
Ares Commercial Real Estate Corporation Competitors 115 845 842 31 2.43

Ares Commercial Real Estate Corporation presently has a consensus target price of $14.31, indicating a potential upside of 8.10%. As a group, “Mortgage REITs” companies have a potential upside of 2.83%. Given Ares Commercial Real Estate Corporation’s higher possible upside, research analysts plainly believe Ares Commercial Real Estate Corporation is more favorable than its peers.

Profitability

This table compares Ares Commercial Real Estate Corporation and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ares Commercial Real Estate Corporation 45.06% 7.07% 2.03%
Ares Commercial Real Estate Corporation Competitors 49.97% 10.41% 2.69%

Insider and Institutional Ownership

64.2% of Ares Commercial Real Estate Corporation shares are held by institutional investors. Comparatively, 57.6% of shares of all “Mortgage REITs” companies are held by institutional investors. 1.8% of Ares Commercial Real Estate Corporation shares are held by insiders. Comparatively, 3.3% of shares of all “Mortgage REITs” companies are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Dividends

Ares Commercial Real Estate Corporation pays an annual dividend of $1.08 per share and has a dividend yield of 8.2%. Ares Commercial Real Estate Corporation pays out 77.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Mortgage REITs” companies pay a dividend yield of 10.1% and pay out 80.4% of their earnings in the form of a dividend.

Earnings & Valuation

This table compares Ares Commercial Real Estate Corporation and its peers revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Ares Commercial Real Estate Corporation $45.12 million N/A 9.46
Ares Commercial Real Estate Corporation Competitors $320.94 million $123.24 million 1.53

Ares Commercial Real Estate Corporation’s peers have higher revenue and earnings than Ares Commercial Real Estate Corporation. Ares Commercial Real Estate Corporation is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Risk and Volatility

Ares Commercial Real Estate Corporation has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500. Comparatively, Ares Commercial Real Estate Corporation’s peers have a beta of 0.71, indicating that their average share price is 29% less volatile than the S&P 500.

Summary

Ares Commercial Real Estate Corporation peers beat Ares Commercial Real Estate Corporation on 9 of the 14 factors compared.

Ares Commercial Real Estate Corporation Company Profile

Ares Commercial Real Estate Corporation is a specialty finance company. The Company is primarily engaged in originating and investing in commercial real estate (CRE) loans and related investments. The Company operates through principal lending segment. Its target investments include senior mortgage loans, subordinated debt, preferred equity, mezzanine loans and other CRE investment opportunities, including commercial mortgage-backed securities. These investments are generally held for investment and are secured, directly or indirectly, by office, multifamily, retail, industrial, lodging, senior-living, self-storage and other commercial real estate properties, or by ownership interests therein. Through the Company’s manager, Ares Commercial Real Estate Management LLC, it has investment professionals located across the United States and Europe who directly source loan opportunities for the Company with owners, operators and sponsors of CRE properties.

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