Arbor Realty Trust (NYSE:ABR) versus KKR Real Estate Finance Trust (NYSE:KREF) Head-To-Head Review

Arbor Realty Trust (NYSE:ABR) and KKR Real Estate Finance Trust (NYSE:KREF) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, profitability, earnings, institutional ownership, risk, dividends and valuation.

Volatility and Risk

Arbor Realty Trust has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500. Comparatively, KKR Real Estate Finance Trust has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings for Arbor Realty Trust and KKR Real Estate Finance Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arbor Realty Trust	4	1	1	0	1.50
KKR Real Estate Finance Trust	2	5	1	0	1.88

Arbor Realty Trust currently has a consensus price target of $8.00, indicating a potential upside of 50.80%. KKR Real Estate Finance Trust has a consensus price target of $8.40, indicating a potential upside of 17.17%. Given Arbor Realty Trust’s higher possible upside, equities analysts plainly believe Arbor Realty Trust is more favorable than KKR Real Estate Finance Trust.

Earnings & Valuation

This table compares Arbor Realty Trust and KKR Real Estate Finance Trust”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arbor Realty Trust	$940.01 million	1.09	$148.80 million	$0.39	13.60
KKR Real Estate Finance Trust	$435.60 million	1.06	-$47.05 million	($1.86)	-3.85

Arbor Realty Trust has higher revenue and earnings than KKR Real Estate Finance Trust. KKR Real Estate Finance Trust 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.

Insider & Institutional Ownership

57.3% of Arbor Realty Trust shares are held by institutional investors. Comparatively, 70.2% of KKR Real Estate Finance Trust shares are held by institutional investors. 4.2% of Arbor Realty Trust shares are held by insiders. Comparatively, 2.1% of KKR Real Estate Finance Trust shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Arbor Realty Trust pays an annual dividend of $0.68 per share and has a dividend yield of 12.8%. KKR Real Estate Finance Trust pays an annual dividend of $1.00 per share and has a dividend yield of 13.9%. Arbor Realty Trust pays out 174.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. KKR Real Estate Finance Trust pays out -53.8% of its earnings in the form of a dividend. KKR Real Estate Finance Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Arbor Realty Trust	12.73%	8.49%	1.46%
KKR Real Estate Finance Trust	-23.55%	-0.78%	-0.14%

Summary

Arbor Realty Trust beats KKR Real Estate Finance Trust on 11 of the 15 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 KKR Real Estate Finance Trust

KKR Real Estate Finance Trust Inc., a mortgage real estate investment trust, focuses primarily on originating and acquiring transitional senior loans secured by commercial real estate (CRE) assets. It engages in the origination and purchase of credit investments related to CRE, including leveraged and unleveraged commercial real estate loans. The company has elected to be taxed as a real estate investment trust and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. KKR Real Estate Finance Trust Inc. was incorporated in 2014 and is headquartered in New York, New York.