Apollo Commercial Real Estate Finance (NYSE:ARI – Get Free Report) and Ellington Financial (NYSE:EFC – Get Free Report) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, valuation, risk, earnings, profitability and institutional ownership.
Institutional and Insider Ownership
54.4% of Apollo Commercial Real Estate Finance shares are held by institutional investors. Comparatively, 55.6% of Ellington Financial shares are held by institutional investors. 0.7% of Apollo Commercial Real Estate Finance shares are held by insiders. Comparatively, 4.1% of Ellington Financial shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Risk and Volatility
Apollo Commercial Real Estate Finance has a beta of 1.6, meaning that its share price is 60% more volatile than the S&P 500. Comparatively, Ellington Financial has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.
Earnings and Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Apollo Commercial Real Estate Finance | $303.67 million | 4.71 | -$119.64 million | ($0.14) | -73.61 |
| Ellington Financial | $136.41 million | 10.01 | $145.86 million | $1.24 | 11.02 |
Ellington Financial has lower revenue, but higher earnings than Apollo Commercial Real Estate Finance. Apollo Commercial Real Estate Finance is trading at a lower price-to-earnings ratio than Ellington Financial, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Apollo Commercial Real Estate Finance and Ellington Financial’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Apollo Commercial Real Estate Finance | -1.49% | 8.42% | 1.74% |
| Ellington Financial | 89.52% | 13.56% | 1.07% |
Dividends
Apollo Commercial Real Estate Finance pays an annual dividend of $1.00 per share and has a dividend yield of 9.7%. Ellington Financial pays an annual dividend of $1.56 per share and has a dividend yield of 11.4%. Apollo Commercial Real Estate Finance pays out -714.3% of its earnings in the form of a dividend. Ellington Financial pays out 125.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Analyst Ratings
This is a summary of recent ratings and recommmendations for Apollo Commercial Real Estate Finance and Ellington Financial, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Apollo Commercial Real Estate Finance | 0 | 4 | 3 | 0 | 2.43 |
| Ellington Financial | 0 | 3 | 5 | 0 | 2.63 |
Apollo Commercial Real Estate Finance presently has a consensus target price of $10.75, suggesting a potential upside of 4.32%. Ellington Financial has a consensus target price of $14.46, suggesting a potential upside of 5.81%. Given Ellington Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Ellington Financial is more favorable than Apollo Commercial Real Estate Finance.
Summary
Ellington Financial beats Apollo Commercial Real Estate Finance on 12 of the 16 factors compared between the two stocks.
About Apollo Commercial Real Estate Finance
Apollo Commercial Real Estate Finance, Inc. operates as a real estate investment trust (REIT) that originates, acquires, invests in, and manages commercial first mortgage loans, subordinate financings, and other commercial real estate-related debt investments in the United States, the United Kingdom, and Europe. It is qualified as a REIT under the Internal Revenue Code. As a REIT, it would not be subject to federal income taxes, if the company distributes at least 90% of its REIT taxable income to its stockholders. Apollo Commercial Real Estate Finance, Inc. was incorporated in 2009 and is based in New York, New York.
About Ellington Financial
Ellington Financial Inc., through its subsidiary, Ellington Financial Operating Partnership LLC, acquires and manages mortgage-related, consumer-related, corporate-related, and other financial assets in the United States. The company acquires and manages residential mortgage-backed securities (RMBS) backed by prime jumbo, Alt-A, manufactured housing, and subprime mortgage; RMBS for which the principal and interest payments are guaranteed by the U.S. government agency or the U.S. government-sponsored entity; residential mortgage loans; commercial mortgage-backed securities; and commercial mortgage loans and other commercial real estate debt. It also provides collateralized loan obligations; mortgage-related and non-mortgage-related derivatives; corporate debt and equity securities; corporate loans; and other strategic investments; and consumer loans and asset-backed securities backed by consumer and commercial assets. The company qualifies as a real estate investment trust (REIT) for federal income tax purposes. As a REIT, it intends to distribute at least 90% of its taxable income as dividends to shareholders. Ellington Financial LLC was incorporated in 2007 and is headquartered in Old Greenwich, Connecticut.
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