Contrasting Ares Commercial Real Estate (NYSE:ACRE) & Claros Mortgage Trust (NYSE:CMTG)

Claros Mortgage Trust (NYSE:CMTG) and Ares Commercial Real Estate (NYSE:ACRE) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, earnings, valuation, profitability, dividends, institutional ownership and analyst recommendations.

Analyst Recommendations

This is a summary of recent ratings and price targets for Claros Mortgage Trust and Ares Commercial Real Estate, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Claros Mortgage Trust	3	1	0	0	1.25
Ares Commercial Real Estate	2	4	1	0	1.86

Claros Mortgage Trust currently has a consensus target price of $2.22, suggesting a potential upside of 47.19%. Ares Commercial Real Estate has a consensus target price of $5.25, suggesting a potential upside of 16.10%. Given Claros Mortgage Trust’s higher probable upside, equities research analysts plainly believe Claros Mortgage Trust is more favorable than Ares Commercial Real Estate.

Institutional & Insider Ownership

89.5% of Claros Mortgage Trust shares are held by institutional investors. Comparatively, 41.3% of Ares Commercial Real Estate shares are held by institutional investors. 2.6% of Claros Mortgage Trust shares are held by insiders. Comparatively, 2.3% of Ares Commercial Real Estate shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

Claros Mortgage Trust has a beta of 1.16, suggesting that its share price is 16% more volatile than the S&P 500. Comparatively, Ares Commercial Real Estate has a beta of 1.16, suggesting that its share price is 16% more volatile than the S&P 500.

Dividends

Claros Mortgage Trust pays an annual dividend of $0.40 per share and has a dividend yield of 26.6%. Ares Commercial Real Estate pays an annual dividend of $0.60 per share and has a dividend yield of 13.3%. Claros Mortgage Trust pays out -10.4% of its earnings in the form of a dividend. Ares Commercial Real Estate pays out -750.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Earnings and Valuation

This table compares Claros Mortgage Trust and Ares Commercial Real Estate”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Claros Mortgage Trust	$69.81 million	3.04	-$489.07 million	($3.83)	-0.39
Ares Commercial Real Estate	$54.83 million	4.58	-$900,000.00	($0.08)	-56.52

Ares Commercial Real Estate has lower revenue, but higher earnings than Claros Mortgage Trust. Ares Commercial Real Estate is trading at a lower price-to-earnings ratio than Claros Mortgage Trust, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Claros Mortgage Trust and Ares Commercial Real Estate’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Claros Mortgage Trust	-354.13%	-19.70%	-6.52%
Ares Commercial Real Estate	-8.04%	4.08%	1.23%

Summary

Ares Commercial Real Estate beats Claros Mortgage Trust on 9 of the 15 factors compared between the two stocks.

About Claros Mortgage Trust

Claros Mortgage Trust, Inc. operates as a real estate investment trust. It focuses on originating senior and subordinate loans on transitional commercial real estate assets in the United States. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. The company was incorporated in 2015 and is headquartered in New York, New York.

About Ares Commercial Real Estate

Ares Commercial Real Estate Corporation, a specialty finance company, originates and invests in commercial real estate (CRE) loans and related investments in the United States. It provides a range of financing solutions for the owners, operators, and sponsors of CRE properties. The company originates senior mortgage loans, subordinate debt and preferred equity products, mezzanine loans, and other CRE investments, including commercial mortgage-backed securities. It has elected and qualified to be taxed as a real estate investment trust for the United States federal income tax purposes under the Internal Revenue Code of 1986. Ares Commercial Real Estate Corporation was incorporated in 2011 and is based in New York, New York.