Reviewing Arbor Realty Trust (NYSE:ABR) and Apollo Commercial Real Estate Finance (NYSE:ARI)

Arbor Realty Trust (NYSE:ABR) and Apollo Commercial Real Estate Finance (NYSE:ARI) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their dividends, valuation, earnings, analyst recommendations, profitability, institutional ownership and risk.

Profitability

This table compares Arbor Realty Trust and Apollo Commercial Real Estate Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arbor Realty Trust	22.66%	14.75%	2.65%
Apollo Commercial Real Estate Finance	-39.40%	9.37%	2.03%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Arbor Realty Trust and Apollo Commercial Real Estate Finance, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arbor Realty Trust	2	3	1	0	1.83
Apollo Commercial Real Estate Finance	0	4	0	0	2.00

Arbor Realty Trust presently has a consensus price target of $13.75, suggesting a potential upside of 13.69%. Apollo Commercial Real Estate Finance has a consensus price target of $9.08, suggesting a potential downside of 8.56%. Given Arbor Realty Trust’s higher possible upside, analysts plainly believe Arbor Realty Trust is more favorable than Apollo Commercial Real Estate Finance.

Volatility & Risk

Arbor Realty Trust has a beta of 2.03, suggesting that its share price is 103% more volatile than the S&P 500. Comparatively, Apollo Commercial Real Estate Finance has a beta of 1.74, suggesting that its share price is 74% more volatile than the S&P 500.

Institutional & Insider Ownership

57.3% of Arbor Realty Trust shares are owned by institutional investors. Comparatively, 54.4% of Apollo Commercial Real Estate Finance shares are owned by institutional investors. 3.7% of Arbor Realty Trust shares are owned by company insiders. Comparatively, 0.7% of Apollo Commercial Real Estate Finance shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Arbor Realty Trust and Apollo Commercial Real Estate Finance”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arbor Realty Trust	$625.94 million	3.66	$264.64 million	$1.19	10.16
Apollo Commercial Real Estate Finance	$195.66 million	7.05	-$119.64 million	($0.95)	-10.46

Arbor Realty Trust has higher revenue and earnings than Apollo Commercial Real Estate Finance. Apollo Commercial Real Estate Finance is trading at a lower price-to-earnings ratio than Arbor Realty Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

Arbor Realty Trust pays an annual dividend of $1.72 per share and has a dividend yield of 14.2%. Apollo Commercial Real Estate Finance pays an annual dividend of $1.00 per share and has a dividend yield of 10.1%. Arbor Realty Trust pays out 144.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Apollo Commercial Real Estate Finance pays out -105.3% of its earnings in the form of a dividend. Arbor Realty Trust has increased its dividend for 13 consecutive years. Arbor Realty Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Arbor Realty Trust beats Apollo Commercial Real Estate Finance on 14 of the 17 factors compared between the two stocks.

About Arbor Realty Trust

Arbor Realty Trust, Inc. invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States. The company operates through Structured Business and Agency Business segments. It primarily invests in bridge and mezzanine loans, including junior participating interests in first mortgages, and preferred and direct equity, as well as real estate-related joint ventures, real estate-related notes, and various mortgage-related securities. In addition, the company offers bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property; financing by making preferred equity investments in entities that directly or indirectly own real property; mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction; junior participation financing in the form of a junior participating interest in the senior debt; and financing products to borrowers who are looking to acquire conventional, workforce, and affordable single-family housing. Further, it underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs. 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. Arbor Realty Trust, Inc. was incorporated in 2003 and is headquartered in Uniondale, New York.

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.