BrightSpire Capital (NYSE:BRSP) & Ares Commercial Real Estate (NYSE:ACRE) Head to Head Analysis

Ares Commercial Real Estate (NYSE:ACREGet Rating) and BrightSpire Capital (NYSE:BRSPGet Rating) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, institutional ownership, valuation, profitability, risk, analyst recommendations and dividends.

Dividends

Ares Commercial Real Estate pays an annual dividend of $1.32 per share and has a dividend yield of 10.0%. BrightSpire Capital pays an annual dividend of $0.76 per share and has a dividend yield of 9.0%. Ares Commercial Real Estate pays out 98.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. BrightSpire Capital pays out 506.7% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Ares Commercial Real Estate and BrightSpire Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ares Commercial Real Estate 58.09% 9.74% 2.68%
BrightSpire Capital 13.73% 7.51% 2.17%

Insider & Institutional Ownership

46.7% of Ares Commercial Real Estate shares are held by institutional investors. Comparatively, 66.2% of BrightSpire Capital shares are held by institutional investors. 2.0% of Ares Commercial Real Estate shares are held by company insiders. Comparatively, 1.0% of BrightSpire Capital shares are held by company 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.

Earnings & Valuation

This table compares Ares Commercial Real Estate and BrightSpire Capital’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ares Commercial Real Estate $102.07 million 6.12 $60.46 million $1.34 9.82
BrightSpire Capital $119.51 million 9.24 -$101.05 million $0.15 56.14

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

Analyst Ratings

This is a breakdown of recent recommendations for Ares Commercial Real Estate and BrightSpire Capital, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ares Commercial Real Estate 0 1 2 0 2.67
BrightSpire Capital 0 1 3 0 2.75

Ares Commercial Real Estate currently has a consensus price target of $15.88, indicating a potential upside of 20.63%. BrightSpire Capital has a consensus price target of $11.25, indicating a potential upside of 33.61%. Given BrightSpire Capital’s stronger consensus rating and higher possible upside, analysts clearly believe BrightSpire Capital is more favorable than Ares Commercial Real Estate.

Volatility and Risk

Ares Commercial Real Estate has a beta of 1.23, suggesting that its share price is 23% more volatile than the S&P 500. Comparatively, BrightSpire Capital has a beta of 1.64, suggesting that its share price is 64% more volatile than the S&P 500.

About Ares Commercial Real Estate

(Get Rating)

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. The company provides a range of financing solutions for the owners, operators, and sponsors of CRE properties. It originates senior mortgage loans, subordinate debt products, mezzanine loans, real estate preferred equity investments, and other CRE investments, including commercial mortgage backed securities. The company 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 Management LLC operates as the manager of the company. The company was incorporated in 2011 and is based in New York, New York.

About BrightSpire Capital

(Get Rating)

BrightSpire Capital, Inc. operates as a commercial real estate (CRE) credit real estate investment trust in the United States. It focuses on originating, acquiring, financing, and managing a portfolio of CRE senior mortgage loans, mezzanine loans, preferred equity, debt securities, and net leased properties. The company qualifies as a real estate investment trust for federal income tax purposes. The company was formerly known as Colony Credit Real Estate, Inc. and changed its name to BrightSpire Capital, Inc. in June 2021. BrightSpire Capital, Inc. was incorporated in 2017 and is headquartered in New York, New York.

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