Analyzing Apollo Commercial Real Estate Finance (ARI) and New York Mortgage Trust (NYMT)

Apollo Commercial Real Estate Finance (NYSE: ARI) and New York Mortgage Trust (NASDAQ:NYMT) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, earnings, risk, profitability and dividends.

Institutional and Insider Ownership

64.9% of Apollo Commercial Real Estate Finance shares are held by institutional investors. Comparatively, 36.1% of New York Mortgage Trust shares are held by institutional investors. 0.6% of Apollo Commercial Real Estate Finance shares are held by company insiders. Comparatively, 1.3% of New York Mortgage Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Apollo Commercial Real Estate Finance has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500. Comparatively, New York Mortgage Trust has a beta of 1.37, suggesting that its stock price is 37% more volatile than the S&P 500.

Profitability

This table compares Apollo Commercial Real Estate Finance and New York Mortgage Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Apollo Commercial Real Estate Finance 93.54% 9.59% 5.20%
New York Mortgage Trust 19.62% 10.05% 0.71%

Dividends

Apollo Commercial Real Estate Finance pays an annual dividend of $1.84 per share and has a dividend yield of 10.1%. New York Mortgage Trust pays an annual dividend of $0.80 per share and has a dividend yield of 12.9%. Apollo Commercial Real Estate Finance pays out 86.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. New York Mortgage Trust pays out 156.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. New York Mortgage Trust has increased its dividend for 2 consecutive years. New York Mortgage Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Apollo Commercial Real Estate Finance and New York Mortgage Trust’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Apollo Commercial Real Estate Finance $221.93 million 8.67 $223.53 million $2.12 8.60
New York Mortgage Trust $107.14 million 6.50 $57.06 million $0.51 12.20

Apollo Commercial Real Estate Finance has higher revenue and earnings than New York Mortgage Trust. Apollo Commercial Real Estate Finance is trading at a lower price-to-earnings ratio than New York Mortgage Trust, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current recommendations for Apollo Commercial Real Estate Finance and New York Mortgage Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Apollo Commercial Real Estate Finance 0 4 1 0 2.20
New York Mortgage Trust 0 4 1 0 2.20

Apollo Commercial Real Estate Finance currently has a consensus price target of $18.50, indicating a potential upside of 1.43%. New York Mortgage Trust has a consensus price target of $6.33, indicating a potential upside of 1.82%. Given New York Mortgage Trust’s higher possible upside, analysts plainly believe New York Mortgage Trust is more favorable than Apollo Commercial Real Estate Finance.

Summary

Apollo Commercial Real Estate Finance beats New York Mortgage Trust on 8 of the 15 factors compared between the two stocks.

About Apollo Commercial Real Estate Finance

Apollo Commercial Real Estate Finance, Inc. is a real estate investment trust. The Company primarily originates, acquires, invests in and manages performing commercial first mortgage loans, subordinate financings, commercial mortgage-backed securities (CMBS) and other commercial real estate-related debt investments. The Company targets investments that are secured by institutional quality real estate. The Company’s principal business objective is to make investments in its target assets in order to provide attractive risk adjusted returns to its stockholders over the long term, primarily through dividends and secondarily through capital appreciation. The Company is externally managed and advised by ACREFI Management, LLC.

About New York Mortgage Trust

New York Mortgage Trust, Inc. is a real estate investment trust (REIT). The Company is engaged in the business of acquiring, investing in, financing and managing primarily mortgage-related assets and financial assets. The Company’s investment portfolio includes residential mortgage loans, including second mortgages and loans sourced from distressed markets, non-agency residential mortgage-backed securities (RMBS), multi-family commercial mortgage-backed securities, preferred equity and joint venture equity investments in, and mezzanine loans to, owners of multi-family properties, equity and debt securities issued by entities that invest in residential and commercial real estate and agency RMBS. It may acquire and manage various other types of mortgage-related and financial assets, including, without limitation, collateralized mortgage obligations and securities issued by newly originated residential securitizations, including credit sensitive securities from these securitizations.

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