Sunrise Realty Trust (NASDAQ:SUNS – Get Free Report) and Ares Commercial Real Estate (NYSE:ACRE – Get Free Report) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, risk, valuation, dividends and analyst recommendations.
Insider and Institutional Ownership
41.3% of Ares Commercial Real Estate shares are held by institutional investors. 28.5% of Sunrise Realty Trust shares are held by company insiders. Comparatively, 2.3% of Ares Commercial Real Estate shares are held 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.
Analyst Recommendations
This is a breakdown of current recommendations and price targets for Sunrise Realty Trust and Ares Commercial Real Estate, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Sunrise Realty Trust | 1 | 3 | 0 | 0 | 1.75 |
| Ares Commercial Real Estate | 2 | 4 | 1 | 0 | 1.86 |
Sunrise Realty Trust currently has a consensus price target of $6.50, indicating a potential upside of 1.72%. Ares Commercial Real Estate has a consensus price target of $5.00, indicating a potential upside of 44.30%. Given Ares Commercial Real Estate’s stronger consensus rating and higher possible upside, analysts plainly believe Ares Commercial Real Estate is more favorable than Sunrise Realty Trust.
Earnings and Valuation
This table compares Sunrise Realty Trust and Ares Commercial Real Estate”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Sunrise Realty Trust | $21.57 million | 4.01 | $12.14 million | $0.97 | 6.59 |
| Ares Commercial Real Estate | $54.83 million | 3.51 | -$900,000.00 | ($0.08) | -43.31 |
Sunrise Realty Trust has higher earnings, but lower revenue than Ares Commercial Real Estate. Ares Commercial Real Estate is trading at a lower price-to-earnings ratio than Sunrise Realty Trust, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Sunrise Realty Trust has a beta of 1.04, suggesting that its share price is 4% more volatile than the S&P 500. Comparatively, Ares Commercial Real Estate has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500.
Profitability
This table compares Sunrise Realty Trust and Ares Commercial Real Estate’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Sunrise Realty Trust | 53.33% | 8.25% | 4.90% |
| Ares Commercial Real Estate | -8.04% | 4.08% | 1.23% |
Dividends
Sunrise Realty Trust pays an annual dividend of $1.20 per share and has a dividend yield of 18.8%. Ares Commercial Real Estate pays an annual dividend of $0.60 per share and has a dividend yield of 17.3%. Sunrise Realty Trust pays out 123.7% 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 pays out -750.0% of its earnings in the form of a dividend.
Summary
Sunrise Realty Trust beats Ares Commercial Real Estate on 9 of the 16 factors compared between the two stocks.
About Sunrise Realty Trust
Sunrise Realty Trust, Inc. engages in commercial real estate (CRE) lending business. It focuses on originating CRE debt investments and providing capital to borrowers and sponsors with transitional business plans collateralized by CRE assets. The company intends to create a diversified investment portfolio, targeting investments in senior mortgage loans, mezzanine loans, whole loans, B-notes, CMBS, and debt-like preferred equity securities across CRE asset classes. Sunrise Realty Trust, Inc. was incorporated in 2023 and is based in West Palm Beach, Florida.
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.
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