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

Profitability

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

Net Margins Return on Equity Return on Assets
Ares Commercial Real Estate Corporation 33.69% 7.76% 2.16%
AG Mortgage Investment Trust 74.99% 11.21% 1.93%

Volatility and Risk

Ares Commercial Real Estate Corporation has a beta of 0.68, suggesting that its share price is 32% less volatile than the S&P 500. Comparatively, AG Mortgage Investment Trust has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500.

Earnings and Valuation

This table compares Ares Commercial Real Estate Corporation and AG Mortgage Investment Trust’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Ares Commercial Real Estate Corporation $81.96 million 4.51 $40.33 million $1.14 11.33
AG Mortgage Investment Trust $123.01 million 4.30 $63.68 million $2.86 6.56

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

Dividends

Ares Commercial Real Estate Corporation pays an annual dividend of $1.08 per share and has a dividend yield of 8.4%. AG Mortgage Investment Trust pays an annual dividend of $1.90 per share and has a dividend yield of 10.1%. Ares Commercial Real Estate Corporation pays out 94.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. AG Mortgage Investment Trust pays out 66.4% of its earnings in the form of a dividend. AG Mortgage Investment Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

64.2% of Ares Commercial Real Estate Corporation shares are owned by institutional investors. Comparatively, 64.9% of AG Mortgage Investment Trust shares are owned by institutional investors. 1.8% of Ares Commercial Real Estate Corporation shares are owned by company insiders. Comparatively, 1.6% of AG Mortgage Investment Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings for Ares Commercial Real Estate Corporation and AG Mortgage Investment Trust, as reported 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
AG Mortgage Investment Trust 0 3 0 0 2.00

Ares Commercial Real Estate Corporation presently has a consensus price target of $14.42, indicating a potential upside of 11.58%. AG Mortgage Investment Trust has a consensus price target of $18.17, indicating a potential downside of 3.21%. Given Ares Commercial Real Estate Corporation’s stronger consensus rating and higher probable upside, equities analysts plainly believe Ares Commercial Real Estate Corporation is more favorable than AG Mortgage Investment Trust.

Summary

AG Mortgage Investment Trust beats Ares Commercial Real Estate Corporation on 9 of the 16 factors compared between the two stocks.

About Ares Commercial Real Estate Corporation

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.

About AG Mortgage Investment Trust

AG Mortgage Investment Trust, Inc. is a real estate investment trust (REIT). The Company focuses on investing in, acquiring and managing a diversified portfolio of residential mortgage assets, other real estate-related securities and financial assets, which the Company refers to as its target assets. It also focuses on investing in residential mortgage-backed securities (RMBS) issued or guaranteed by a government-sponsored enterprise, such as The Federal National Mortgage Association (Fannie Mae) or The Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively, GSEs), or any agency of the United States Government, such as The Government National Mortgage Association (Ginnie Mae) (collectively Agency RMBS), and other real estate-related securities and financial assets, including Non-Agency RMBS, asset backed securities (ABS), commercial mortgage-backed securities (CMBS) and loans.

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