Saul Centers (NYSE:BFS) and Ares Commercial Real Estate (NYSE:ACRE) Head to Head Contrast

Saul Centers (NYSE:BFSGet Rating) and Ares Commercial Real Estate (NYSE:ACREGet Rating) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, profitability, risk and dividends.

Profitability

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

Net Margins Return on Equity Return on Assets
Saul Centers 20.75% 14.65% 2.87%
Ares Commercial Real Estate 41.32% 10.07% 2.78%

Dividends

Saul Centers pays an annual dividend of $2.36 per share and has a dividend yield of 5.5%. Ares Commercial Real Estate pays an annual dividend of $1.32 per share and has a dividend yield of 10.7%. Saul Centers pays out 143.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ares Commercial Real Estate pays out 145.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Saul Centers has raised its dividend for 2 consecutive years.

Earnings & Valuation

This table compares Saul Centers and Ares Commercial Real Estate’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Saul Centers $239.23 million 4.29 $48.39 million $1.65 26.02
Ares Commercial Real Estate $102.07 million 6.61 $60.46 million $0.91 13.62

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

Analyst Ratings

This is a breakdown of current ratings and price targets for Saul Centers and Ares Commercial Real Estate, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Saul Centers 0 2 1 0 2.33
Ares Commercial Real Estate 0 1 4 0 2.80

Saul Centers currently has a consensus price target of $51.50, suggesting a potential upside of 19.96%. Ares Commercial Real Estate has a consensus price target of $13.25, suggesting a potential upside of 6.94%. Given Saul Centers’ higher possible upside, equities research analysts plainly believe Saul Centers is more favorable than Ares Commercial Real Estate.

Volatility and Risk

Saul Centers has a beta of 1.13, meaning that its stock price is 13% more volatile than the S&P 500. Comparatively, Ares Commercial Real Estate has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500.

Insider & Institutional Ownership

46.8% of Saul Centers shares are held by institutional investors. Comparatively, 46.5% of Ares Commercial Real Estate shares are held by institutional investors. 51.5% of Saul Centers shares are held by company insiders. Comparatively, 2.0% of Ares Commercial Real Estate shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Saul Centers beats Ares Commercial Real Estate on 10 of the 17 factors compared between the two stocks.

About Saul Centers

(Get Rating)

Saul Centers, Inc. is a self-managed, self-administered equity REIT headquartered in Bethesda, Maryland, which currently operates and manages a real estate portfolio of 60 properties which includes (a) 50 community and neighborhood shopping centers and seven mixed-use properties with approximately 9.8 million square feet of leasable area and (b) three land and development properties. Approximately 85% of the Saul Centers' property operating income is generated by properties in the metropolitan Washington, DC/Baltimore area.

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.

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