Sutherland Asset Management Corp. (NYSE: SLD) and Arbor Realty Trust (NYSE:ABR) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, profitability, valuation, analyst recommendations, institutional ownership, earnings and risk.

Profitability

This table compares Sutherland Asset Management Corp. and Arbor Realty Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sutherland Asset Management Corp. 42.38% 8.19% 1.83%
Arbor Realty Trust 54.47% 10.47% 2.48%

Valuation and Earnings

This table compares Sutherland Asset Management Corp. and Arbor Realty Trust’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sutherland Asset Management Corp. $124.55 million 4.06 $61.43 million $1.92 8.23
Arbor Realty Trust $282.94 million 1.76 $68.71 million $1.12 7.23

Arbor Realty Trust has higher revenue and earnings than Sutherland Asset Management Corp.. Arbor Realty Trust is trading at a lower price-to-earnings ratio than Sutherland Asset Management Corp., indicating that it is currently the more affordable of the two stocks.

Dividends

Sutherland Asset Management Corp. pays an annual dividend of $1.48 per share and has a dividend yield of 9.4%. Arbor Realty Trust pays an annual dividend of $0.72 per share and has a dividend yield of 8.9%. Sutherland Asset Management Corp. pays out 77.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Arbor Realty Trust pays out 64.3% of its earnings in the form of a dividend. Sutherland Asset Management Corp. has increased its dividend for 5 consecutive years. Sutherland Asset Management Corp. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current recommendations for Sutherland Asset Management Corp. and Arbor Realty Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sutherland Asset Management Corp. 0 0 1 0 3.00
Arbor Realty Trust 0 1 1 0 2.50

Sutherland Asset Management Corp. currently has a consensus price target of $16.00, suggesting a potential upside of 1.27%. Arbor Realty Trust has a consensus price target of $8.88, suggesting a potential upside of 9.57%. Given Arbor Realty Trust’s higher probable upside, analysts plainly believe Arbor Realty Trust is more favorable than Sutherland Asset Management Corp..

Volatility & Risk

Sutherland Asset Management Corp. has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500. Comparatively, Arbor Realty Trust has a beta of 0.67, meaning that its stock price is 33% less volatile than the S&P 500.

Institutional & Insider Ownership

30.2% of Sutherland Asset Management Corp. shares are held by institutional investors. Comparatively, 47.8% of Arbor Realty Trust shares are held by institutional investors. 2.4% of Sutherland Asset Management Corp. shares are held by insiders. Comparatively, 16.5% of Arbor Realty Trust shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Arbor Realty Trust beats Sutherland Asset Management Corp. on 9 of the 16 factors compared between the two stocks.

Sutherland Asset Management Corp. Company Profile

Sutherland Asset Management Corporation, formerly ZAIS Financial Corp., is a diversified mortgage real estate investment trust (REIT). The Company originates, acquires, finances, services and manages small balance commercial loans (SBC) and Small Business Administration (SBA) loans. The Company focuses on maintaining its existing residential mortgage origination platform, GMFS. The Company originates SBC and SBA loans through its ReadyCap subsidiaries. The Company also invests in asset-backed securities, where the underlying pool of assets consists primarily of SBC loans, and other real estate-related investments. The Company is managed and advised by Waterfall Asset Management, LLC.

Arbor Realty Trust Company Profile

Arbor Realty Trust, Inc. is a real estate investment trust. The Company invests in a portfolio of structured finance assets in the multifamily and commercial real estate markets, primarily consisting of bridge and mezzanine loans, including junior participating interests in first mortgages, preferred and direct equity. Its segments include Structured Business and Agency Business. In addition, the Company may also directly acquire real property and invest in real estate-related notes and certain mortgage-related securities. It focuses on investment types, such as Bridge Financing, Mezzanine Financing, Junior Participation Financing and Preferred Equity Investments. It offers bridge financing products to borrowers, typically seeking short-term capital to use in an acquisition of property. It offers mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction.

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