Arbor Realty Trust (NYSE:ABR) and Ladder Capital (NYSE:LADR) Critical Review

Ladder Capital (NYSE:LADR) and Arbor Realty Trust (NYSE:ABR) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, valuation, risk, institutional ownership, analyst recommendations, earnings and profitability.

Profitability

This table compares Ladder Capital and Arbor Realty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ladder Capital	20.05%	7.07%	2.24%
Arbor Realty Trust	20.75%	12.26%	2.26%

Earnings & Valuation

This table compares Ladder Capital and Arbor Realty Trust”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ladder Capital	$506.84 million	2.65	$108.25 million	$0.70	15.04
Arbor Realty Trust	$1.17 billion	1.96	$264.64 million	$0.91	13.07

Arbor Realty Trust has higher revenue and earnings than Ladder Capital. Arbor Realty Trust is trading at a lower price-to-earnings ratio than Ladder Capital, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings for Ladder Capital and Arbor Realty Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ladder Capital	0	1	2	1	3.00
Arbor Realty Trust	2	4	1	0	1.86

Ladder Capital currently has a consensus price target of $12.00, suggesting a potential upside of 13.96%. Arbor Realty Trust has a consensus price target of $11.63, suggesting a potential downside of 2.23%. Given Ladder Capital’s stronger consensus rating and higher possible upside, analysts clearly believe Ladder Capital is more favorable than Arbor Realty Trust.

Institutional & Insider Ownership

62.3% of Ladder Capital shares are owned by institutional investors. Comparatively, 57.3% of Arbor Realty Trust shares are owned by institutional investors. 12.0% of Ladder Capital shares are owned by company insiders. Comparatively, 3.8% of Arbor Realty Trust shares are owned 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.

Dividends

Ladder Capital pays an annual dividend of $0.92 per share and has a dividend yield of 8.7%. Arbor Realty Trust pays an annual dividend of $1.20 per share and has a dividend yield of 10.1%. Ladder Capital pays out 131.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Arbor Realty Trust pays out 131.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility and Risk

Ladder Capital has a beta of 1.09, indicating that its share price is 9% more volatile than the S&P 500. Comparatively, Arbor Realty Trust has a beta of 1.37, indicating that its share price is 37% more volatile than the S&P 500.

Summary

Ladder Capital beats Arbor Realty Trust on 9 of the 17 factors compared between the two stocks.

About Ladder Capital

Ladder Capital Corp operates as an internally-managed real estate investment trust in the United States. It operates through three segments: Loans, Securities, and Real Estate. The Loans segment originates conduit first mortgage loans that are secured by cash-flowing commercial real estate; and originates and invests in balance sheet first mortgage loans secured by commercial real estate properties that are undergoing transition, including lease-up, sell-out, and renovation or repositioning. It also invests in note purchase financings, subordinated debt, mezzanine debt, and other structured finance products related to commercial real estate. The Securities segment invests in commercial mortgage-backed securities, U.S. treasury and agency, corporate bonds, and equity securities. The Real Estate segment owns and invests in a portfolio of commercial and residential real estate properties, such as leased properties, office buildings, student housing portfolios, hotels, industrial buildings, shopping center, and condominium units. 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 stockholders. The company was founded in 2008 and is headquartered in New York, New York.

About Arbor Realty Trust

Arbor Realty Trust, Inc. invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States. The company operates through Structured Business and Agency Business segments. It primarily invests in bridge and mezzanine loans, including junior participating interests in first mortgages, and preferred and direct equity, as well as real estate-related joint ventures, real estate-related notes, and various mortgage-related securities. In addition, the company offers bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property; financing by making preferred equity investments in entities that directly or indirectly own real property; mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction; junior participation financing in the form of a junior participating interest in the senior debt; and financing products to borrowers who are looking to acquire conventional, workforce, and affordable single-family housing. Further, it underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs. 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 stockholders. Arbor Realty Trust, Inc. was incorporated in 2003 and is headquartered in Uniondale, New York.