Contrasting Ares Commercial Real Estate (NYSE:ACRE) and Claros Mortgage Trust (NYSE:CMTG)

Claros Mortgage Trust (NYSE:CMTG) and Ares Commercial Real Estate (NYSE:ACRE) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, valuation, dividends, earnings, risk, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Claros Mortgage Trust and Ares Commercial Real Estate, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Claros Mortgage Trust	3	1	0	0	1.25
Ares Commercial Real Estate	2	4	1	0	1.86

Claros Mortgage Trust currently has a consensus target price of $2.22, suggesting a potential upside of 33.53%. Ares Commercial Real Estate has a consensus target price of $5.25, suggesting a potential upside of 13.39%. Given Claros Mortgage Trust’s higher probable upside, research analysts clearly believe Claros Mortgage Trust is more favorable than Ares Commercial Real Estate.

Profitability

This table compares Claros Mortgage Trust and Ares Commercial Real Estate’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Claros Mortgage Trust	-354.13%	-19.70%	-6.52%
Ares Commercial Real Estate	-8.04%	4.08%	1.23%

Volatility and Risk

Claros Mortgage Trust has a beta of 1.16, indicating that its stock price is 16% more volatile than the S&P 500. Comparatively, Ares Commercial Real Estate has a beta of 1.15, indicating that its stock price is 15% more volatile than the S&P 500.

Valuation & Earnings

This table compares Claros Mortgage Trust and Ares Commercial Real Estate”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Claros Mortgage Trust	$187.83 million	1.25	-$489.07 million	($3.83)	-0.43
Ares Commercial Real Estate	$54.83 million	4.68	-$900,000.00	($0.08)	-57.88

Ares Commercial Real Estate has lower revenue, but higher earnings than Claros Mortgage Trust. Ares Commercial Real Estate is trading at a lower price-to-earnings ratio than Claros Mortgage Trust, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

89.5% of Claros Mortgage Trust shares are held by institutional investors. Comparatively, 41.3% of Ares Commercial Real Estate shares are held by institutional investors. 2.6% of Claros Mortgage Trust shares are held by insiders. Comparatively, 2.3% of Ares Commercial Real Estate shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Ares Commercial Real Estate beats Claros Mortgage Trust on 8 of the 14 factors compared between the two stocks.

About Claros Mortgage Trust

Claros Mortgage Trust, Inc. operates as a real estate investment trust. It focuses on originating senior and subordinate loans on transitional commercial real estate assets in the United States. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. The company was incorporated in 2015 and is headquartered in New York, New York.

About Ares Commercial Real Estate

Ares Commercial Real Estate Corporation, a specialty finance company, originates and invests in commercial real estate (CRE) loans and related investments in the United States. It provides a range of financing solutions for the owners, operators, and sponsors of CRE properties. The company originates senior mortgage loans, subordinate debt and preferred equity products, mezzanine loans, and other CRE investments, including commercial mortgage-backed securities. It has elected and qualified to be taxed as a real estate investment trust for the United States federal income tax purposes under the Internal Revenue Code of 1986. Ares Commercial Real Estate Corporation was incorporated in 2011 and is based in New York, New York.