Cherry Hill Mortgage Investment Corporation (NYSE: CHMI) and Apollo Commercial Real Estate Finance (NYSE:ARI) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, risk, profitability and dividends.

Dividends

Cherry Hill Mortgage Investment Corporation pays an annual dividend of $1.96 per share and has a dividend yield of 10.5%. Apollo Commercial Real Estate Finance pays an annual dividend of $1.84 per share and has a dividend yield of 10.0%. Cherry Hill Mortgage Investment Corporation pays out 28.1% of its earnings in the form of a dividend. Apollo Commercial Real Estate Finance pays out 86.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Cherry Hill Mortgage Investment Corporation has raised its dividend for 2 consecutive years. Cherry Hill Mortgage Investment Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Cherry Hill Mortgage Investment Corporation and Apollo Commercial Real Estate Finance, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cherry Hill Mortgage Investment Corporation 0 1 2 0 2.67
Apollo Commercial Real Estate Finance 0 3 1 0 2.25

Cherry Hill Mortgage Investment Corporation presently has a consensus price target of $19.17, indicating a potential upside of 3.16%. Apollo Commercial Real Estate Finance has a consensus price target of $18.50, indicating a potential upside of 0.98%. Given Cherry Hill Mortgage Investment Corporation’s stronger consensus rating and higher probable upside, equities analysts plainly believe Cherry Hill Mortgage Investment Corporation is more favorable than Apollo Commercial Real Estate Finance.

Volatility and Risk

Cherry Hill Mortgage Investment Corporation has a beta of 0.38, meaning that its share price is 62% less volatile than the S&P 500. Comparatively, Apollo Commercial Real Estate Finance has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500.

Profitability

This table compares Cherry Hill Mortgage Investment Corporation and Apollo Commercial Real Estate Finance’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cherry Hill Mortgage Investment Corporation 138.90% 9.49% 1.81%
Apollo Commercial Real Estate Finance 93.54% 9.59% 5.20%

Valuation & Earnings

This table compares Cherry Hill Mortgage Investment Corporation and Apollo Commercial Real Estate Finance’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Cherry Hill Mortgage Investment Corporation $65.25 million 3.62 $88.70 million $6.98 2.66
Apollo Commercial Real Estate Finance $221.93 million 8.70 $223.53 million $2.12 8.64

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

Insider and Institutional Ownership

62.4% of Cherry Hill Mortgage Investment Corporation shares are held by institutional investors. Comparatively, 64.9% of Apollo Commercial Real Estate Finance shares are held by institutional investors. 8.9% of Cherry Hill Mortgage Investment Corporation shares are held by company insiders. Comparatively, 0.6% of Apollo Commercial Real Estate Finance shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Cherry Hill Mortgage Investment Corporation beats Apollo Commercial Real Estate Finance on 9 of the 17 factors compared between the two stocks.

Cherry Hill Mortgage Investment Corporation Company Profile

Cherry Hill Mortgage Investment Corporation is a residential real estate finance company. The Company is focused on acquiring, investing in and managing residential mortgage assets in the United States. Its principal objective is to generate attractive current yields and risk-adjusted total returns for its stockholders over the long term, primarily through dividend distributions and secondarily through capital appreciation. The Company focuses on attaining this objective, subject to market conditions and availability and terms of financing, by selectively constructing and managing a targeted portfolio of Servicing Related Assets, residential mortgage-backed securities (RMBS), prime mortgage loans and other cashflowing residential mortgage assets. The Company operates its business through segments, including investments in RMBS; investments in Servicing Related Assets, and All Other. The Company is externally managed by Cherry Hill Mortgage Management, LLC.

Apollo Commercial Real Estate Finance Company Profile

Apollo Commercial Real Estate Finance, Inc. is a real estate investment trust. The Company primarily originates, acquires, invests in and manages performing commercial first mortgage loans, subordinate financings, commercial mortgage-backed securities (CMBS) and other commercial real estate-related debt investments. The Company targets investments that are secured by institutional quality real estate. The Company’s principal business objective is to make investments in its target assets in order to provide attractive risk adjusted returns to its stockholders over the long term, primarily through dividends and secondarily through capital appreciation. The Company is externally managed and advised by ACREFI Management, LLC.

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