Financial Survey: Ares Commercial Real Estate (NYSE:ACRE) versus AGNC Investment (NASDAQ:AGNCO)

AGNC Investment (NASDAQ:AGNCO) and Ares Commercial Real Estate (NYSE:ACRE) are both real estate companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, dividends, profitability, earnings, analyst recommendations, risk and valuation.

Analyst Recommendations

This is a summary of current recommendations and price targets for AGNC Investment and Ares Commercial Real Estate, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AGNC Investment	0	0	0	0	N/A
Ares Commercial Real Estate	2	5	0	0	1.71

Ares Commercial Real Estate has a consensus target price of $7.20, suggesting a potential upside of 6.04%. Given Ares Commercial Real Estate’s higher probable upside, analysts clearly believe Ares Commercial Real Estate is more favorable than AGNC Investment.

Insider & Institutional Ownership

41.3% of Ares Commercial Real Estate shares are owned by institutional investors. 2.8% of Ares Commercial Real Estate shares are owned by 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.

Earnings & Valuation

This table compares AGNC Investment and Ares Commercial Real Estate”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AGNC Investment	$514.00 million	N/A	N/A	N/A	N/A
Ares Commercial Real Estate	$9.92 million	37.29	-$38.87 million	($0.83)	-8.18

AGNC Investment has higher revenue and earnings than Ares Commercial Real Estate.

Profitability

This table compares AGNC Investment and Ares Commercial Real Estate’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AGNC Investment	N/A	N/A	N/A
Ares Commercial Real Estate	-65.99%	-3.25%	-0.92%

Dividends

AGNC Investment pays an annual dividend of $1.63 per share and has a dividend yield of 6.5%. Ares Commercial Real Estate pays an annual dividend of $1.00 per share and has a dividend yield of 14.7%. Ares Commercial Real Estate pays out -120.5% of its earnings in the form of a dividend.

Summary

Ares Commercial Real Estate beats AGNC Investment on 5 of the 9 factors compared between the two stocks.

About AGNC Investment

AGNC Investment Corp. provides private capital to housing market in the United States. It invests in residential mortgage pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by the United States government-sponsored enterprise or by the United States government agency. 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 formerly known as American Capital Agency Corp. and changed its name to AGNC Investment Corp. in September 2016. AGNC Investment Corp. was incorporated in 2008 and is headquartered in Bethesda, Maryland.

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.