Analyzing Paramount Group (NYSE:PGRE) & Apollo Commercial Real Estate Finance (NYSE:ARI)

Apollo Commercial Real Estate Finance (NYSE:ARIGet Rating) and Paramount Group (NYSE:PGREGet Rating) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, valuation, profitability, earnings, dividends, analyst recommendations and institutional ownership.

Dividends

Apollo Commercial Real Estate Finance pays an annual dividend of $1.40 per share and has a dividend yield of 11.0%. Paramount Group pays an annual dividend of $0.31 per share and has a dividend yield of 3.4%. Apollo Commercial Real Estate Finance pays out 126.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Paramount Group pays out -619.9% of its earnings in the form of a dividend. Paramount Group has raised its dividend for 1 consecutive years.

Valuation & Earnings

This table compares Apollo Commercial Real Estate Finance and Paramount Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Apollo Commercial Real Estate Finance $265.59 million 6.75 $223.51 million $1.11 11.50
Paramount Group $726.79 million 2.75 -$20.35 million ($0.05) -182.36

Apollo Commercial Real Estate Finance has higher earnings, but lower revenue than Paramount Group. Paramount Group is trading at a lower price-to-earnings ratio than Apollo Commercial Real Estate Finance, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Apollo Commercial Real Estate Finance and Paramount Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Apollo Commercial Real Estate Finance 70.24% 8.63% 2.40%
Paramount Group -1.84% -0.30% -0.16%

Risk & Volatility

Apollo Commercial Real Estate Finance has a beta of 1.25, indicating that its stock price is 25% more volatile than the S&P 500. Comparatively, Paramount Group has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500.

Insider & Institutional Ownership

57.6% of Apollo Commercial Real Estate Finance shares are held by institutional investors. Comparatively, 64.3% of Paramount Group shares are held by institutional investors. 0.5% of Apollo Commercial Real Estate Finance shares are held by insiders. Comparatively, 10.4% of Paramount Group shares are held by 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 breakdown of current recommendations for Apollo Commercial Real Estate Finance and Paramount Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Apollo Commercial Real Estate Finance 0 1 0 0 2.00
Paramount Group 2 1 2 0 2.00

Apollo Commercial Real Estate Finance presently has a consensus target price of $13.50, indicating a potential upside of 5.80%. Paramount Group has a consensus target price of $11.30, indicating a potential upside of 23.90%. Given Paramount Group’s higher probable upside, analysts clearly believe Paramount Group is more favorable than Apollo Commercial Real Estate Finance.

Summary

Apollo Commercial Real Estate Finance beats Paramount Group on 9 of the 16 factors compared between the two stocks.

Apollo Commercial Real Estate Finance Company Profile (Get Rating)

Apollo Commercial Real Estate Finance, Inc. operates as a real estate investment trust (REIT) that originates, acquires, invests in, and manages commercial first mortgage loans, subordinate financings, and other commercial real estate-related debt investments in the United States. It is qualified as a REIT under the Internal Revenue Code. As a REIT, it would not be subject to federal income taxes, if the company distributes at least 90% of its REIT taxable income to its stockholders. Apollo Commercial Real Estate Finance, Inc. was founded in 2009 and is based in New York, New York.

Paramount Group Company Profile (Get Rating)

Headquartered in New York City, Paramount Group, Inc. is a fully-integrated real estate investment trust that owns, operates, manages, acquires and redevelops high-quality, Class A office properties located in select central business district submarkets of New York City and San Francisco. Paramount is focused on maximizing the value of its portfolio by leveraging the sought-after locations of its assets and its proven property management capabilities to attract and retain high-quality tenants.

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