Apollo Commercial Real Estate Finance (ARI): Revisiting Valuation After Return to Profitability

Apollo Commercial Real Estate Finance (ARI) has posted third quarter and nine-month results that turn last year’s losses into profits, catching the attention of investors looking for positive momentum in the sector.

See our latest analysis for Apollo Commercial Real Estate Finance.

Apollo Commercial Real Estate Finance’s return to profitability is building real momentum, with the stock delivering a total shareholder return of 21.17% over the last year. The recent swing back into the black appears to be improving sentiment and highlighting longer-term value for investors who have stuck with it.

If Apollo’s turnaround has your curiosity piqued, it is the perfect moment to see what else is on the move by exploring fast growing stocks with high insider ownership

The key question now is whether Apollo’s strong turnaround still leaves the stock undervalued, or if recent gains mean the market has already priced in all the potential upside. Is this a true buying opportunity, or has growth already been accounted for?

Price-to-Earnings of 11.2x: Is it justified?

Trading at a price-to-earnings (P/E) ratio of 11.2x, Apollo Commercial Real Estate Finance looks attractively valued compared to its last close price of $9.93 and falls below the industry average.

The price-to-earnings ratio compares a company's current share price to its earnings per share. It serves as a quick yardstick for how the market values its future profitability. For an income-focused REIT like ARI, this metric can highlight whether investors are expecting steady or volatile returns ahead.

At 11.2x, ARI’s P/E is below the US market’s average of 18.1x and the US Mortgage REITs industry average of 12.4x. This suggests the stock could be undervalued relative to both the market and its direct peers. Even when compared to its estimated fair P/E ratio of 13.7x, ARI appears to have more room to run if sentiment continues to improve.

Explore the SWS fair ratio for Apollo Commercial Real Estate Finance

Result: Price-to-Earnings of 11.2x (UNDERVALUED)

However, slower annual revenue growth and recent short-term stock declines remain factors that could temper investor optimism. This is despite ARI's attractive valuation.

Find out about the key risks to this Apollo Commercial Real Estate Finance narrative.

Build Your Own Apollo Commercial Real Estate Finance Narrative

If you want to dig into the numbers differently or put together your own take on Apollo Commercial Real Estate Finance, you can craft a personalized perspective in just a couple of minutes, Do it your way

A great starting point for your Apollo Commercial Real Estate Finance research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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