Ares Commercial Real Estate (NYSE:ACRE – Get Free Report) and PennyMac Mortgage Investment Trust (NYSE:PMT – Get Free Report) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, earnings, dividends, risk and valuation.
Risk & Volatility
Ares Commercial Real Estate has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500. Comparatively, PennyMac Mortgage Investment Trust has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500.
Profitability
This table compares Ares Commercial Real Estate and PennyMac Mortgage Investment Trust’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Ares Commercial Real Estate | -20.22% | -1.51% | -0.46% |
| PennyMac Mortgage Investment Trust | 40.42% | 8.87% | 0.90% |
Valuation and Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Ares Commercial Real Estate | $69.65 million | 3.82 | -$34.99 million | ($0.25) | -19.34 |
| PennyMac Mortgage Investment Trust | $334.19 million | 3.23 | $160.98 million | $0.93 | 13.36 |
PennyMac Mortgage Investment Trust has higher revenue and earnings than Ares Commercial Real Estate. Ares Commercial Real Estate is trading at a lower price-to-earnings ratio than PennyMac Mortgage Investment Trust, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a breakdown of recent ratings for Ares Commercial Real Estate and PennyMac Mortgage Investment Trust, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Ares Commercial Real Estate | 1 | 5 | 0 | 0 | 1.83 |
| PennyMac Mortgage Investment Trust | 0 | 5 | 3 | 0 | 2.38 |
Ares Commercial Real Estate presently has a consensus price target of $5.50, suggesting a potential upside of 13.75%. PennyMac Mortgage Investment Trust has a consensus price target of $14.50, suggesting a potential upside of 16.70%. Given PennyMac Mortgage Investment Trust’s stronger consensus rating and higher probable upside, analysts plainly believe PennyMac Mortgage Investment Trust is more favorable than Ares Commercial Real Estate.
Dividends
Ares Commercial Real Estate pays an annual dividend of $0.60 per share and has a dividend yield of 12.4%. PennyMac Mortgage Investment Trust pays an annual dividend of $1.60 per share and has a dividend yield of 12.9%. Ares Commercial Real Estate pays out -240.0% of its earnings in the form of a dividend. PennyMac Mortgage Investment Trust pays out 172.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Insider & Institutional Ownership
41.3% of Ares Commercial Real Estate shares are held by institutional investors. Comparatively, 67.4% of PennyMac Mortgage Investment Trust shares are held by institutional investors. 1.8% of Ares Commercial Real Estate shares are held by insiders. Comparatively, 0.9% of PennyMac Mortgage Investment Trust shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Summary
PennyMac Mortgage Investment Trust beats Ares Commercial Real Estate on 12 of the 16 factors compared between the two stocks.
About Ares Commercial Real Estate
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 PennyMac Mortgage Investment Trust
PennyMac Mortgage Investment Trust, through its subsidiary, primarily invests in mortgage-related assets in the United States. The company operates through: Credit Sensitive Strategies, Interest Rate Sensitive Strategies, Correspondent Production segments. Its Credit Sensitive Strategies segment invests in credit risk transfer (CRT) agreements, CRT securities, subordinate mortgage-backed securities (MBS), distressed loans, and real estate. The company's Interest Rate Sensitive Strategies segment engages in investing in mortgage servicing rights, excess servicing spreads, and agency and senior non-agency MBS, as well as related interest rate hedging activities. Its Correspondent Production segment is involved in purchasing, pooling, and reselling newly originated prime credit residential loans directly or in the form of MBS. The company primarily sells its loans to government-sponsored entities or PennyMac Loan Services, LLC. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its shareholders. The company was incorporated in 2009 and is headquartered in Westlake Village, California.
Receive News & Ratings for Ares Commercial Real Estate Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Ares Commercial Real Estate and related companies with MarketBeat.com's FREE daily email newsletter.
