Chicago Atlantic Real Estate Finance (NASDAQ:REFI – Get Free Report) and Ares Commercial Real Estate (NYSE:ACRE – Get Free Report) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, profitability, earnings, analyst recommendations and dividends.
Profitability
This table compares Chicago Atlantic Real Estate Finance and Ares Commercial Real Estate’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Chicago Atlantic Real Estate Finance | 51.08% | 12.35% | 8.38% |
| Ares Commercial Real Estate | 1.76% | 4.38% | 1.24% |
Analyst Ratings
This is a breakdown of recent ratings and recommmendations for Chicago Atlantic Real Estate Finance and Ares Commercial Real Estate, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Chicago Atlantic Real Estate Finance | 1 | 2 | 2 | 0 | 2.20 |
| Ares Commercial Real Estate | 2 | 4 | 1 | 0 | 1.86 |
Chicago Atlantic Real Estate Finance presently has a consensus price target of $16.00, suggesting a potential upside of 86.15%. Ares Commercial Real Estate has a consensus price target of $4.55, suggesting a potential upside of 32.08%. Given Chicago Atlantic Real Estate Finance’s stronger consensus rating and higher probable upside, research analysts plainly believe Chicago Atlantic Real Estate Finance is more favorable than Ares Commercial Real Estate.
Dividends
Chicago Atlantic Real Estate Finance pays an annual dividend of $1.88 per share and has a dividend yield of 21.9%. Ares Commercial Real Estate pays an annual dividend of $0.60 per share and has a dividend yield of 17.4%. Chicago Atlantic Real Estate Finance pays out 156.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. 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. Chicago Atlantic Real Estate Finance has raised its dividend for 1 consecutive years. Chicago Atlantic Real Estate Finance is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility & Risk
Chicago Atlantic Real Estate Finance has a beta of 0.28, indicating that its stock price is 72% less volatile than the S&P 500. Comparatively, Ares Commercial Real Estate has a beta of 1.22, indicating that its stock price is 22% more volatile than the S&P 500.
Earnings & Valuation
This table compares Chicago Atlantic Real Estate Finance and Ares Commercial Real Estate”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Chicago Atlantic Real Estate Finance | $55.39 million | 3.98 | $36.01 million | $1.20 | 7.16 |
| Ares Commercial Real Estate | $54.83 million | 3.49 | -$900,000.00 | $0.02 | 172.25 |
Chicago Atlantic Real Estate Finance has higher revenue and earnings than Ares Commercial Real Estate. Chicago Atlantic Real Estate Finance is trading at a lower price-to-earnings ratio than Ares Commercial Real Estate, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
25.5% of Chicago Atlantic Real Estate Finance shares are owned by institutional investors. Comparatively, 41.3% of Ares Commercial Real Estate shares are owned by institutional investors. 6.5% of Chicago Atlantic Real Estate Finance shares are owned by insiders. Comparatively, 2.3% of Ares Commercial Real Estate shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Summary
Chicago Atlantic Real Estate Finance beats Ares Commercial Real Estate on 14 of the 17 factors compared between the two stocks.
About Chicago Atlantic Real Estate Finance
Chicago Atlantic Real Estate Finance, Inc. is a commercial mortgage real estate investment trust focused on providing debt capital to businesses in the U.S. cannabis industry. The company primarily serves state-licensed cannabis operators and related businesses. Its financing may include senior secured loans, bridge loans and other structured credit arrangements, often backed by commercial real estate or other borrower assets. The company is externally managed by an affiliate of Chicago Atlantic, an investment firm focused on the cannabis sector.
About Ares Commercial Real Estate
Ares Commercial Real Estate Corporation is a mortgage real estate investment trust that originates and invests in commercial real estate debt. Its investments include senior mortgage loans, mezzanine loans and other forms of commercial real estate financing. The company focuses primarily on commercial properties in the United States, serving borrowers and property owners across a range of real estate sectors. Its lending and investment activities are conducted through an affiliate of Ares Management Corporation, a global alternative investment manager.
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