Head-To-Head Survey: Franklin BSP Realty Trust (NYSE:FBRT) vs. Apollo Commercial Real Estate Finance (NYSE:ARI)

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

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Apollo Commercial Real Estate Finance	$271.59 million	5.45	-$119.64 million	$0.80	13.26
Franklin BSP Realty Trust	$270.07 million	2.68	$95.88 million	$0.80	11.07

Franklin BSP Realty Trust has lower revenue, but higher earnings than Apollo Commercial Real Estate Finance. Franklin BSP Realty Trust 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.

Dividends

Apollo Commercial Real Estate Finance pays an annual dividend of $1.00 per share and has a dividend yield of 9.4%. Franklin BSP Realty Trust pays an annual dividend of $1.42 per share and has a dividend yield of 16.0%. Apollo Commercial Real Estate Finance pays out 125.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Franklin BSP Realty Trust pays out 177.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Apollo Commercial Real Estate Finance	46.66%	7.94%	1.55%
Franklin BSP Realty Trust	31.03%	7.22%	1.55%

Insider & Institutional Ownership

54.4% of Apollo Commercial Real Estate Finance shares are held by institutional investors. Comparatively, 59.9% of Franklin BSP Realty Trust shares are held by institutional investors. 0.7% of Apollo Commercial Real Estate Finance shares are held by company insiders. Comparatively, 1.4% of Franklin BSP Realty Trust shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings for Apollo Commercial Real Estate Finance and Franklin BSP Realty Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Apollo Commercial Real Estate Finance	0	4	3	0	2.43
Franklin BSP Realty Trust	0	2	3	0	2.60

Apollo Commercial Real Estate Finance currently has a consensus target price of $11.00, indicating a potential upside of 3.72%. Franklin BSP Realty Trust has a consensus target price of $14.00, indicating a potential upside of 58.10%. Given Franklin BSP Realty Trust’s stronger consensus rating and higher probable upside, analysts plainly believe Franklin BSP Realty Trust is more favorable than Apollo Commercial Real Estate Finance.

Risk and Volatility

Apollo Commercial Real Estate Finance has a beta of 1.54, indicating that its share price is 54% more volatile than the S&P 500. Comparatively, Franklin BSP Realty Trust has a beta of 0.98, indicating that its share price is 2% less volatile than the S&P 500.

Summary

Franklin BSP Realty Trust beats Apollo Commercial Real Estate Finance on 7 of the 13 factors compared between the two stocks.

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.

About Franklin BSP Realty Trust

Benefit Street Partners operates as a self-managed real estate investment trust (REIT). BSP earns income from investing in a leveraged portfolio of residential mortgage pass-through securities consisting almost exclusively of adjustable-rate mortgage (ARM) securities issued and guaranteed by government-sponsored enterprises, either Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corporation (Freddie Mac) (together, the government-sponsored enterprises (GSEs)), or by an agency of the federal government, Government National Mortgage Association (Ginnie Mae). BSP’s investment strategy focuses on managing a portfolio of residential mortgage investments consisting almost exclusively of ARM Agency Securities. As of December 31, 2012, the Company’s securities consisted of Agency Securities classified as available-for-sale and Residential mortgage securities classified as held-to-maturity.