Head-To-Head Contrast: Claros Mortgage Trust (NYSE:CMTG) & Ares Commercial Real Estate (NYSE:ACRE)

Ares Commercial Real Estate (NYSE:ACRE) and Claros Mortgage Trust (NYSE:CMTG) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, risk, dividends, earnings and valuation.

Risk and Volatility

Ares Commercial Real Estate has a beta of 1.16, indicating that its share price is 16% more volatile than the S&P 500. Comparatively, Claros Mortgage Trust has a beta of 1.14, indicating that its share price is 14% more volatile than the S&P 500.

Insider and Institutional Ownership

41.3% of Ares Commercial Real Estate shares are owned by institutional investors. Comparatively, 89.5% of Claros Mortgage Trust shares are owned by institutional investors. 2.3% of Ares Commercial Real Estate shares are owned by company insiders. Comparatively, 2.6% of Claros Mortgage Trust shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Ares Commercial Real Estate and Claros Mortgage Trust”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ares Commercial Real Estate	$54.83 million	4.26	-$900,000.00	($0.08)	-52.69
Claros Mortgage Trust	$69.81 million	2.68	-$489.07 million	($3.83)	-0.35

Ares Commercial Real Estate has higher earnings, but lower revenue than Claros Mortgage Trust. Ares Commercial Real Estate is trading at a lower price-to-earnings ratio than Claros Mortgage Trust, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Ares Commercial Real Estate and Claros Mortgage Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ares Commercial Real Estate	2	4	1	0	1.86
Claros Mortgage Trust	3	1	0	0	1.25

Ares Commercial Real Estate presently has a consensus price target of $5.25, suggesting a potential upside of 24.56%. Claros Mortgage Trust has a consensus price target of $2.22, suggesting a potential upside of 67.30%. Given Claros Mortgage Trust’s higher probable upside, analysts plainly believe Claros Mortgage Trust is more favorable than Ares Commercial Real Estate.

Profitability

This table compares Ares Commercial Real Estate and Claros Mortgage Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ares Commercial Real Estate	-8.04%	4.08%	1.23%
Claros Mortgage Trust	-354.13%	-19.70%	-6.52%

Dividends

Ares Commercial Real Estate pays an annual dividend of $0.60 per share and has a dividend yield of 14.2%. Claros Mortgage Trust pays an annual dividend of $0.40 per share and has a dividend yield of 30.2%. Ares Commercial Real Estate pays out -750.0% of its earnings in the form of a dividend. Claros Mortgage Trust pays out -10.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Summary

Ares Commercial Real Estate beats Claros Mortgage Trust on 10 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 Claros Mortgage Trust

Claros Mortgage Trust, Inc. operates as a real estate investment trust. It focuses on originating senior and subordinate loans on transitional commercial real estate assets in the United States. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. The company was incorporated in 2015 and is headquartered in New York, New York.