Critical Review: Ares Commercial Real Estate (ACRE) vs. Its Competitors

Ares Commercial Real Estate (NYSE:ACRE) is one of 52 public companies in the “Mortgage Real Estate Investment Trusts (REITs)” industry, but how does it compare to its rivals? We will compare Ares Commercial Real Estate to similar companies based on the strength of its analyst recommendations, earnings, institutional ownership, valuation, risk, dividends and profitability.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Ares Commercial Real Estate	1.76%	4.38%	1.24%
Ares Commercial Real Estate Competitors	-13.31%	7.65%	1.05%

Volatility & Risk

Ares Commercial Real Estate has a beta of 1.22, suggesting that its share price is 22% more volatile than the S&P 500. Comparatively, Ares Commercial Real Estate’s rivals have a beta of 1.21, suggesting that their average share price is 21% more volatile than the S&P 500.

Insider and Institutional Ownership

41.3% of Ares Commercial Real Estate shares are held by institutional investors. Comparatively, 52.3% of shares of all “Mortgage Real Estate Investment Trusts (REITs)” companies are held by institutional investors. 2.3% of Ares Commercial Real Estate shares are held by company insiders. Comparatively, 4.8% of shares of all “Mortgage Real Estate Investment Trusts (REITs)” companies are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Ares Commercial Real Estate pays an annual dividend of $0.60 per share and has a dividend yield of 16.6%. Ares Commercial Real Estate pays out 3,000.0% 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 Real Estate Investment Trusts (REITs)” companies pay a dividend yield of 17.3% and pay out -104.8% of their earnings in the form of a dividend. Ares Commercial Real Estate lags its rivals as a dividend stock, given its lower dividend yield and higher payout ratio.

Analyst Ratings

This is a summary of recent ratings for Ares Commercial Real Estate and its rivals, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ares Commercial Real Estate	2	4	1	0	1.86
Ares Commercial Real Estate Competitors	690	1987	2137	136	2.35

Ares Commercial Real Estate currently has a consensus price target of $4.55, suggesting a potential upside of 25.73%. As a group, “Mortgage Real Estate Investment Trusts (REITs)” companies have a potential upside of 49.66%. Given Ares Commercial Real Estate’s rivals stronger consensus rating and higher probable upside, analysts plainly believe Ares Commercial Real Estate has less favorable growth aspects than its rivals.

Valuation & Earnings

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

	Gross Revenue	Net Income	Price/Earnings Ratio
Ares Commercial Real Estate	$54.83 million	-$900,000.00	180.95
Ares Commercial Real Estate Competitors	$637.33 million	$157.00 million	18.94

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

Summary

Ares Commercial Real Estate rivals beat Ares Commercial Real Estate on 11 of the 15 factors compared.

Ares Commercial Real Estate Company Profile

Ares Commercial Real Estate Corporation is a specialty finance company organized as a real estate investment trust (REIT). The company originates and invests in commercial real estate loans, with a primary focus on senior mortgage loans secured by properties in the United States. Its investment portfolio may include loans backed by multifamily, office, industrial, retail, hotel and other commercial properties. Ares Commercial Real Estate generally targets transitional and other commercial real estate assets that require financing for acquisition, redevelopment, renovation or repositioning.