Apollo Commercial Real Estate Finance (NYSE:ARI) versus MFA Financial (NYSE:MFA) Head to Head Analysis

MFA Financial (NYSE:MFA) and Apollo Commercial Real Estate Finance (NYSE:ARI) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, dividends, analyst recommendations and valuation.

Dividends

MFA Financial pays an annual dividend of $1.44 per share and has a dividend yield of 15.0%. Apollo Commercial Real Estate Finance pays an annual dividend of $15.00 per share and has a dividend yield of 139.5%. MFA Financial pays out 165.5% 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 1,851.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MFA Financial has increased its dividend for 1 consecutive years.

Risk & Volatility

MFA Financial has a beta of 1.43, meaning that its share price is 43% more volatile than the S&P 500. Comparatively, Apollo Commercial Real Estate Finance has a beta of 1.35, meaning that its share price is 35% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for MFA Financial and Apollo Commercial Real Estate Finance, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MFA Financial	0	4	4	0	2.50
Apollo Commercial Real Estate Finance	0	4	2	0	2.33

MFA Financial currently has a consensus target price of $10.45, suggesting a potential upside of 8.80%. Apollo Commercial Real Estate Finance has a consensus target price of $11.13, suggesting a potential upside of 3.44%. Given MFA Financial’s stronger consensus rating and higher possible upside, equities research analysts clearly believe MFA Financial is more favorable than Apollo Commercial Real Estate Finance.

Valuation and Earnings

This table compares MFA Financial and Apollo Commercial Real Estate Finance”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MFA Financial	$745.06 million	1.31	$176.78 million	$0.87	11.04
Apollo Commercial Real Estate Finance	$263.30 million	5.35	$126.72 million	$0.81	13.28

MFA Financial has higher revenue and earnings than Apollo Commercial Real Estate Finance. MFA Financial 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.

Institutional and Insider Ownership

65.3% of MFA Financial shares are held by institutional investors. Comparatively, 54.4% of Apollo Commercial Real Estate Finance shares are held by institutional investors. 1.0% of MFA Financial shares are held by insiders. Comparatively, 0.5% of Apollo Commercial Real Estate Finance 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.

Profitability

This table compares MFA Financial and Apollo Commercial Real Estate Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MFA Financial	17.80%	6.86%	0.99%
Apollo Commercial Real Estate Finance	48.01%	7.87%	1.48%

Summary

MFA Financial beats Apollo Commercial Real Estate Finance on 11 of the 17 factors compared between the two stocks.

About MFA Financial

MFA Financial, Inc., together with its subsidiaries, operates as a real estate investment trust in the United States. It invests in residential mortgage securities, including non-agency mortgage-backed securities, agency MBS, and credit risk transfer securities; residential whole loans, including purchased performing loans, purchased credit deteriorated, and non-performing loans; and mortgage servicing rights related assets. The company was incorporated in 1997 and is based in New York, 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.