Analyzing Ares Commercial Real Estate (NYSE:ACRE) & Granite Real Estate Inc. Staple (NYSE:GRP.U)

Ares Commercial Real Estate (NYSE:ACREGet Free Report) and Granite Real Estate Inc. Staple (NYSE:GRP.UGet Free Report) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, valuation, risk, analyst recommendations, earnings, dividends and profitability.

Institutional and Insider Ownership

41.3% of Ares Commercial Real Estate shares are owned by institutional investors. Comparatively, 57.1% of Granite Real Estate Inc. Staple shares are owned by institutional investors. 1.9% of Ares Commercial Real Estate shares are owned by company insiders. Comparatively, 0.3% of Granite Real Estate Inc. Staple shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Dividends

Ares Commercial Real Estate pays an annual dividend of $1.00 per share and has a dividend yield of 13.9%. Granite Real Estate Inc. Staple pays an annual dividend of $2.43 per share and has a dividend yield of 4.4%. Ares Commercial Real Estate pays out -138.9% of its earnings in the form of a dividend. Granite Real Estate Inc. Staple pays out 152.8% 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.

Earnings and Valuation

This table compares Ares Commercial Real Estate and Granite Real Estate Inc. Staple’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ares Commercial Real Estate $88.96 million 4.40 -$38.87 million ($0.72) -9.98
Granite Real Estate Inc. Staple $521.25 million 6.70 $101.24 million $1.59 34.70

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

Volatility & Risk

Ares Commercial Real Estate has a beta of 1.41, meaning that its stock price is 41% more volatile than the S&P 500. Comparatively, Granite Real Estate Inc. Staple has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and target prices for Ares Commercial Real Estate and Granite Real Estate Inc. Staple, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ares Commercial Real Estate 1 7 0 0 1.88
Granite Real Estate Inc. Staple 0 0 0 0 N/A

Ares Commercial Real Estate currently has a consensus price target of $9.00, suggesting a potential upside of 25.26%. Given Ares Commercial Real Estate’s higher possible upside, analysts clearly believe Ares Commercial Real Estate is more favorable than Granite Real Estate Inc. Staple.

Profitability

This table compares Ares Commercial Real Estate and Granite Real Estate Inc. Staple’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ares Commercial Real Estate -43.30% 8.00% 2.29%
Granite Real Estate Inc. Staple 26.28% 2.54% 1.49%

About Ares Commercial Real Estate

(Get Free Report)

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

About Granite Real Estate Inc. Staple

(Get Free Report)

Granite Real Estate Investment Trust is engaged in the ownership and management of predominantly industrial properties in Canada, the United States, Mexico and Europe. The Company owns and manages rental income properties. Its services include sourcing and real estate acquisition, site development, assisting with government approvals and re-zoning to specific uses, build-to-suit construction, property renovation, project management and long-term leasing. Granite Real Estate Investment Trust, formerly known as Granite Real Estate Inc., is based in Toronto, Canada.

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