AFC Gamma (NASDAQ:AFCG) vs. Franklin BSP Realty Trust (NYSE:FBRT) Critical Review

AFC Gamma (NASDAQ:AFCG) and Franklin BSP Realty Trust (NYSE:FBRT) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, profitability and valuation.

Valuation & Earnings

This table compares AFC Gamma and Franklin BSP Realty Trust”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AFC Gamma	$51.99 million	1.62	$16.78 million	($0.41)	-9.10
Franklin BSP Realty Trust	$210.45 million	4.31	$95.88 million	$0.98	11.26

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

Profitability

This table compares AFC Gamma and Franklin BSP Realty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AFC Gamma	-25.35%	10.06%	5.78%
Franklin BSP Realty Trust	53.36%	7.26%	1.54%

Analyst Ratings

This is a breakdown of current ratings and price targets for AFC Gamma and Franklin BSP Realty Trust, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AFC Gamma	0	3	0	1	2.50
Franklin BSP Realty Trust	0	0	4	2	3.33

AFC Gamma presently has a consensus target price of $5.75, suggesting a potential upside of 54.16%. Franklin BSP Realty Trust has a consensus target price of $14.8750, suggesting a potential upside of 34.80%. Given AFC Gamma’s higher possible upside, analysts plainly believe AFC Gamma is more favorable than Franklin BSP Realty Trust.

Insider and Institutional Ownership

26.5% of AFC Gamma shares are held by institutional investors. Comparatively, 59.9% of Franklin BSP Realty Trust shares are held by institutional investors. 26.8% of AFC Gamma shares are held by company insiders. Comparatively, 1.4% of Franklin BSP Realty Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Dividends

AFC Gamma pays an annual dividend of $0.60 per share and has a dividend yield of 16.1%. Franklin BSP Realty Trust pays an annual dividend of $1.42 per share and has a dividend yield of 12.9%. AFC Gamma pays out -146.3% of its earnings in the form of a dividend. Franklin BSP Realty Trust pays out 144.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. AFC Gamma is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

AFC Gamma has a beta of 1.07, indicating that its share price is 7% more volatile than the S&P 500. Comparatively, Franklin BSP Realty Trust has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500.

Summary

Franklin BSP Realty Trust beats AFC Gamma on 10 of the 17 factors compared between the two stocks.

About AFC Gamma

AFC Gamma, Inc. originates, structures, underwrites, and invests in senior secured loans, and other various commercial real estate loans and debt securities for established companies operating in the cannabis industry. It primarily originates loans structured as senior loans secured by real estate, equipment, and licenses and/or other assets of the loan parties to the extent permitted by applicable laws and the regulations governing such loan parties. 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. AFC Gamma, Inc. was incorporated in 2020 and is based in West Palm Beach, Florida.

About Franklin BSP Realty Trust

Benefit Street Partners operates as a self-managed real estate investment trust (REIT). BSP earns income from investing in a leveraged portfolio of residential mortgage pass-through securities consisting almost exclusively of adjustable-rate mortgage (ARM) securities issued and guaranteed by government-sponsored enterprises, either Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corporation (Freddie Mac) (together, the government-sponsored enterprises (GSEs)), or by an agency of the federal government, Government National Mortgage Association (Ginnie Mae). BSP’s investment strategy focuses on managing a portfolio of residential mortgage investments consisting almost exclusively of ARM Agency Securities. As of December 31, 2012, the Company’s securities consisted of Agency Securities classified as available-for-sale and Residential mortgage securities classified as held-to-maturity.