Critical Comparison: Ares Commercial Real Estate (ACRE) and Its Competitors

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

Valuation & Earnings

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

	Gross Revenue	Net Income	Price/Earnings Ratio
Ares Commercial Real Estate	$54.83 million	-$900,000.00	-45.69
Ares Commercial Real Estate Competitors	$762.88 million	$157.00 million	14.19

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

Dividends

Ares Commercial Real Estate pays an annual dividend of $0.60 per share and has a dividend yield of 16.4%. Ares Commercial Real Estate pays out -750.0% of its earnings in the form of a dividend. As a group, “Mortgage Real Estate Investment Trusts (REITs)” companies pay a dividend yield of 16.6% and pay out -224.0% of their earnings in the form of a dividend.

Analyst Recommendations

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

	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	685	1983	2135	136	2.35

Ares Commercial Real Estate currently has a consensus target price of $5.00, suggesting a potential upside of 36.80%. As a group, “Mortgage Real Estate Investment Trusts (REITs)” companies have a potential upside of 47.30%. Given Ares Commercial Real Estate’s rivals stronger consensus rating and higher possible upside, analysts clearly believe Ares Commercial Real Estate has less favorable growth aspects than its rivals.

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	-8.04%	4.08%	1.23%
Ares Commercial Real Estate Competitors	-3.66%	7.59%	1.08%

Institutional and Insider Ownership

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

Volatility & Risk

Ares Commercial Real Estate has a beta of 1.22, suggesting that its stock 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 stock price is 21% more volatile than the S&P 500.

Summary

Ares Commercial Real Estate rivals beat Ares Commercial Real Estate on 12 of the 15 factors compared.

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.