Head to Head Analysis: Apollo Commercial Real Estate Finance (NYSE:ARI) & BrightSpire Capital (NYSE:BRSP)

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

Analyst Recommendations

This is a summary of recent ratings and target prices for Apollo Commercial Real Estate Finance and BrightSpire Capital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Apollo Commercial Real Estate Finance	0	4	2	0	2.33
BrightSpire Capital	2	0	4	0	2.33

Apollo Commercial Real Estate Finance presently has a consensus price target of $11.13, suggesting a potential upside of 1.18%. BrightSpire Capital has a consensus price target of $6.75, suggesting a potential upside of 17.29%. Given BrightSpire Capital’s higher possible upside, analysts clearly believe BrightSpire Capital is more favorable than Apollo Commercial Real Estate Finance.

Insider and Institutional Ownership

54.4% of Apollo Commercial Real Estate Finance shares are held by institutional investors. Comparatively, 56.6% of BrightSpire Capital shares are held by institutional investors. 0.7% of Apollo Commercial Real Estate Finance shares are held by insiders. Comparatively, 2.8% of BrightSpire Capital shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Apollo Commercial Real Estate Finance	48.01%	7.87%	1.48%
BrightSpire Capital	-24.16%	7.46%	2.03%

Earnings & Valuation

This table compares Apollo Commercial Real Estate Finance and BrightSpire Capital”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Apollo Commercial Real Estate Finance	$271.59 million	5.38	$126.72 million	$0.81	13.57
BrightSpire Capital	$194.89 million	3.85	-$31.15 million	($0.27)	-21.31

Apollo Commercial Real Estate Finance has higher revenue and earnings than BrightSpire Capital. BrightSpire 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.

Dividends

Apollo Commercial Real Estate Finance pays an annual dividend of $1.00 per share and has a dividend yield of 9.1%. BrightSpire Capital pays an annual dividend of $0.64 per share and has a dividend yield of 11.1%. Apollo Commercial Real Estate Finance pays out 123.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. BrightSpire Capital pays out -237.0% of its earnings in the form of a dividend. BrightSpire Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Apollo Commercial Real Estate Finance has a beta of 1.37, suggesting that its share price is 37% more volatile than the S&P 500. Comparatively, BrightSpire Capital has a beta of 1.3, suggesting that its share price is 30% more volatile than the S&P 500.

Summary

Apollo Commercial Real Estate Finance beats BrightSpire Capital on 8 of the 15 factors compared between the two stocks.

About Apollo Commercial Real Estate Finance

Apollo Commercial Real Estate Finance, Inc. operates as a real estate investment trust (REIT) that originates, acquires, invests in, and manages commercial first mortgage loans, subordinate financings, and other commercial real estate-related debt investments in the United States, the United Kingdom, and Europe. It is qualified as a REIT under the Internal Revenue Code. As a REIT, it would not be subject to federal income taxes, if the company distributes at least 90% of its REIT taxable income to its stockholders. Apollo Commercial Real Estate Finance, Inc. was incorporated in 2009 and is based in New York, New York.

About BrightSpire Capital

BrightSpire Capital, Inc. operates as a commercial real estate (CRE) credit real estate investment trust in the United States and Europe. The company operates through Senior and Mezzanine Loans and Preferred Equity; Net Leased and Other Real Estate; and Corporate and Other segments. It focuses on originating, acquiring, financing, and managing a diversified portfolio of CRE debt investments consisting of first mortgage loans, senior loans, debt securities, mezzanine loans, and preferred equity investments, as well as net leased properties. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Colony Credit Real Estate, Inc. and changed its name to BrightSpire Capital, Inc. in June 2021. BrightSpire Capital, Inc. was incorporated in 2017 and is headquartered in New York, New York.