Ares Commercial Real Estate (NYSE:ACRE) - Share price, News & Analysis

Q: What is the Fair Price of ACRE when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

ACRE ($13.81) is trading below our estimate of [[fair value]] ($18.89)

ACRE fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	3/6
Past Performance	2/6
Financial Health	3/6
Dividends	4/6

ACRE Stock Overview

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.

Rewards

Trading at 26.9% below our estimate of its fair value

Earnings are forecast to grow 16.31% per year

Risk Analysis

Debt is not well covered by operating cash flow

Dividend of 9.85% is not well covered by earnings or forecast to be in the next 3 years

Shareholders have been diluted in the past year

Ares Commercial Real Estate Competitors

Broadmark Realty Capital

NYSE:BRMK

US$943.4m

TPG RE Finance Trust

NYSE:TRTX

US$789.5m

Granite Point Mortgage Trust

NYSE:GPMT

US$528.7m

KKR Real Estate Finance Trust

NYSE:KREF

US$1.4b

Price History & Performance

Summary of all time highs, changes and price drops for Ares Commercial Real Estate
Historical stock prices
Current Share Price	US$13.81
52 Week High	US$16.48
52 Week Low	US$11.18
Beta	1.27
1 Month Change	7.47%
3 Month Change	-2.06%
1 Year Change	-7.32%
3 Year Change	-9.68%
5 Year Change	4.15%
Change since IPO	-23.28%

Recent News & Updates

Jul 28

Ares Commercial Real Estate Q2 2022 Earnings Preview

Ares Commercial Real Estate (NYSE:ACRE) is scheduled to announce Q2 earnings results on Friday, July 29th, before market open. EPS Estimate is $0.34 (-8.1% Y/Y) and the consensus Revenue Estimate is $21.83M (-6.3% Y/Y). has beaten EPS estimates 88% of the time and has beaten revenue estimates 100% of the time. upward revisions and 2 downward. Revenue estimates have seen 1 upward revision and 2 downward.

Shareholder Returns

	ACRE	US Mortgage REITs	US Market
7D	0.9%	-0.4%	1.4%
1Y	-7.3%	-16.1%	-8.4%

Return vs Industry: ACRE exceeded the US Mortgage REITs industry which returned -17.3% over the past year.

Return vs Market: ACRE exceeded the US Market which returned -9% over the past year.

Price Volatility

Is ACRE's price volatile compared to industry and market?
ACRE volatility
ACRE Average Weekly Movement	5.2%
Mortgage REITs Industry Average Movement	5.4%
Market Average Movement	7.6%
10% most volatile stocks in US Market	17.1%
10% least volatile stocks in US Market	3.1%

Stable Share Price: ACRE is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: ACRE's weekly volatility (5%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2011	n/a	Bryan Donohoe	https://www.arescre.com

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. The company provides a range of financing solutions for the owners, operators, and sponsors of CRE properties. It originates senior mortgage loans, subordinate debt products, mezzanine loans, real estate preferred equity investments, and other CRE investments, including commercial mortgage backed securities.

Ares Commercial Real Estate Fundamentals Summary

How do Ares Commercial Real Estate's earnings and revenue compare to its market cap?
ACRE fundamental statistics
Market Cap	US$751.39m
Earnings (TTM)	US$53.34m
Revenue (TTM)	US$90.66m

14.1x

P/E Ratio

8.3x

P/S Ratio

Is ACRE overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
ACRE income statement (TTM)
Revenue	US$90.66m
Cost of Revenue	US$0
Gross Profit	US$90.66m
Other Expenses	US$37.32m
Earnings	US$53.34m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	0.98
Gross Margin	100.00%
Net Profit Margin	58.83%
Debt/Equity Ratio	238.7%

How did ACRE perform over the long term?

See historical performance and comparison

Dividends

9.8%

Current Dividend Yield

119%

Payout Ratio

Does ACRE pay a reliable dividends?

See ACRE dividend history and benchmarks

When do you need to buy ACRE by to receive an upcoming dividend?
Ares Commercial Real Estate dividend dates
Ex Dividend Date	Sep 29 2022
Dividend Pay Date	Oct 17 2022
Days until Ex dividend	40 days
Days until Dividend pay date	58 days

Does ACRE pay a reliable dividends?

See ACRE dividend history and benchmarks

We’ve recently updated our valuation analysis.

Valuation

Is ACRE undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for ACRE?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for ACRE. This is calculated by dividing ACRE's market cap by their current preferred multiple.
What is ACRE's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$751.39m

ACRE key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	n/a
Enterprise Value/EBITDA	n/a
PEG Ratio	0.9x

Price to Earnings Ratio vs Peers

How does ACRE's PE Ratio compare to its peers?

ACRE PE Ratio vs Peers

The above table shows the PE ratio for ACRE vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	23.1x
BRMK Broadmark Realty Capital	12.1x	13.7%	US$943.4m
TRTX TPG RE Finance Trust	10x	23.3%	US$789.5m
GPMT Granite Point Mortgage Trust	58.7x	42.2%	US$528.7m
KREF KKR Real Estate Finance Trust	11.7x	4.3%	US$1.4b
ACRE Ares Commercial Real Estate	14.1x	16.3%	US$751.4m

Price-To-Earnings vs Peers: ACRE is good value based on its Price-To-Earnings Ratio (14.1x) compared to the peer average (23.1x).

Price to Earnings Ratio vs Industry

How does ACRE's PE Ratio compare vs other companies in the US Mortgage REITs Industry?

Price-To-Earnings vs Industry: ACRE is expensive based on its Price-To-Earnings Ratio (14.1x) compared to the US Mortgage REITs industry average (12.8x)

Price to Earnings Ratio vs Fair Ratio

What is ACRE's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

ACRE PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	14.1x
Fair PE Ratio	13.4x

Price-To-Earnings vs Fair Ratio: ACRE is expensive based on its Price-To-Earnings Ratio (14.1x) compared to the estimated Fair Price-To-Earnings Ratio (13.4x).

Share Price vs Fair Value

What is the Fair Price of ACRE when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: ACRE ($13.81) is trading below our estimate of fair value ($18.89)

Significantly Below Fair Value: ACRE is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.

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Future Growth

How is Ares Commercial Real Estate forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

Future Growth Score

3/6

Future Growth Score 3/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

16.3%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: ACRE's forecast earnings growth (16.3% per year) is above the savings rate (1.9%).

Earnings vs Market: ACRE's earnings (16.3% per year) are forecast to grow faster than the US market (14.4% per year).

High Growth Earnings: ACRE's earnings are forecast to grow, but not significantly.

Revenue vs Market: ACRE's revenue (11.2% per year) is forecast to grow faster than the US market (7.8% per year).

High Growth Revenue: ACRE's revenue (11.2% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: Insufficient data to determine if ACRE's Return on Equity is forecast to be high in 3 years time

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Past Performance

How has Ares Commercial Real Estate performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

13.4%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: ACRE has high quality earnings.

Growing Profit Margin: ACRE's current net profit margins (58.8%) are lower than last year (64.8%).

Past Earnings Growth Analysis

Earnings Trend: ACRE's earnings have grown by 13.4% per year over the past 5 years.

Accelerating Growth: ACRE's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: ACRE had negative earnings growth (-14.9%) over the past year, making it difficult to compare to the Mortgage REITs industry average (-1.6%).

Return on Equity

High ROE: ACRE's Return on Equity (6.8%) is considered low.

Discover strong past performing companies

Financial Health

How is Ares Commercial Real Estate's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: ACRE's short term assets ($2.7B) exceed its short term liabilities ($604.4M).

Long Term Liabilities: ACRE's short term assets ($2.7B) exceed its long term liabilities ($1.3B).

Debt to Equity History and Analysis

Debt Level: ACRE's net debt to equity ratio (234.1%) is considered high.

Reducing Debt: ACRE's debt to equity ratio has reduced from 295.1% to 238.7% over the past 5 years.

Debt Coverage: ACRE's debt is not well covered by operating cash flow (3.1%).

Interest Coverage: Insufficient data to determine if ACRE's interest payments on its debt are well covered by EBIT.

Balance Sheet

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Dividend

What is Ares Commercial Real Estate current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

9.85%

Current Dividend Yield

Upcoming Dividend Payment

Dividend Yield vs Market

Notable Dividend: ACRE's dividend (9.85%) is higher than the bottom 25% of dividend payers in the US market (1.48%).

High Dividend: ACRE's dividend (9.85%) is in the top 25% of dividend payers in the US market (3.99%)

Stability and Growth of Payments

Stable Dividend: ACRE's dividends per share have been stable in the past 10 years.

Growing Dividend: ACRE's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its high payout ratio (118.7%), ACRE's dividend payments are not well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its high cash payout ratio (128.2%), ACRE's dividend payments are not well covered by cash flows.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

3.1yrs

Average management tenure

CEO

Bryan Donohoe (43 yo)

2.67yrs

Tenure

US$760,200

Compensation

Mr. Bryan Patrick Donohoe serves as Partner at Ares Management Corporation since 2019 and served as its Co-Head of Real Estate Debt - Real Estate Group since February 2022 until April 2022 and served as it...

Leadership Team

Experienced Management: ACRE's management team is considered experienced (3.1 years average tenure).

Board Members

Experienced Board: ACRE's board of directors are considered experienced (6.3 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 15.9%.

Data	Last Updated (UTC time)
Company Analysis	2022/08/18 00:00
End of Day Share Price	2022/08/18 00:00
Earnings	2022/06/30
Annual Earnings	2021/12/31