Critical Review: Sunrise Realty Trust (NASDAQ:SUNS) & Arbor Realty Trust (NYSE:ABR)

Sunrise Realty Trust (NASDAQ:SUNS) and Arbor Realty Trust (NYSE:ABR) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, analyst recommendations, earnings, profitability, valuation and dividends.

Earnings and Valuation

This table compares Sunrise Realty Trust and Arbor Realty Trust”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sunrise Realty Trust	$21.57 million	4.44	$12.14 million	$0.97	7.30
Arbor Realty Trust	$455.92 million	0.59	$148.80 million	($0.64)	-2.29

Arbor Realty Trust has higher revenue and earnings than Sunrise Realty Trust. Arbor Realty Trust 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.

Dividends

Sunrise Realty Trust pays an annual dividend of $1.29 per share and has a dividend yield of 18.2%. Arbor Realty Trust pays an annual dividend of $0.68 per share and has a dividend yield of 46.4%. Sunrise Realty Trust pays out 133.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Arbor Realty Trust pays out -106.3% of its earnings in the form of a dividend. Arbor Realty Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Sunrise Realty Trust and Arbor Realty Trust’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%
Arbor Realty Trust	-7.96%	3.98%	0.62%

Institutional and Insider Ownership

57.3% of Arbor Realty Trust shares are held by institutional investors. 28.5% of Sunrise Realty Trust shares are held by insiders. Comparatively, 4.2% of Arbor Realty Trust shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Risk & Volatility

Sunrise Realty Trust has a beta of 1, indicating that its share price has a similar volatility profile to the S&P 500.Comparatively, Arbor Realty Trust has a beta of 1.28, indicating that its share price is 28% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and target prices for Sunrise Realty Trust and Arbor Realty Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sunrise Realty Trust	1	3	0	0	1.75
Arbor Realty Trust	4	2	0	0	1.33

Sunrise Realty Trust currently has a consensus target price of $6.50, indicating a potential downside of 8.19%. Arbor Realty Trust has a consensus target price of $5.12, indicating a potential upside of 249.83%. Given Arbor Realty Trust’s higher probable upside, analysts clearly believe Arbor Realty Trust is more favorable than Sunrise Realty Trust.

Summary

Sunrise Realty Trust beats Arbor Realty Trust on 8 of the 15 factors compared between the two stocks.

About Sunrise Realty Trust

Sunrise Realty Trust, Inc. is a real estate investment trust focused on commercial real estate finance. The company invests in and originates commercial real estate debt, seeking to generate income from loans and other investments secured by properties in the United States. Its investment activities are centered primarily on mortgage loans and other credit investments backed by commercial real estate. These investments may support the acquisition, refinancing, development, redevelopment or repositioning of properties, with the portfolio generally targeting opportunities in the middle-market commercial real estate sector.

About Arbor Realty Trust

Arbor Realty Trust, Inc. is a real estate investment trust focused primarily on financing multifamily and other commercial real estate. Through its structured finance business, the company provides loans and other capital solutions, including bridge and mezzanine loans and preferred equity investments. The company also operates an agency lending business that arranges financing for multifamily properties through programs sponsored by government-backed housing agencies. Its activities include originating and servicing loans, as well as investing in commercial real estate-related assets.