Ares Commercial Real Estate (NYSE:ACRE – Get Free Report) and Modiv Industrial (NYSE:MDV – Get Free Report) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.
Risk & Volatility
Ares Commercial Real Estate has a beta of 1.51, meaning that its share price is 51% more volatile than the S&P 500. Comparatively, Modiv Industrial has a beta of -0.2, meaning that its share price is 120% less volatile than the S&P 500.
Valuation and Earnings
This table compares Ares Commercial Real Estate and Modiv Industrial”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Ares Commercial Real Estate | $88.96 million | 3.46 | -$38.87 million | ($1.18) | -4.79 |
| Modiv Industrial | $46.94 million | 3.00 | -$6.61 million | ($0.11) | -132.68 |
Profitability
This table compares Ares Commercial Real Estate and Modiv Industrial’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Ares Commercial Real Estate | -95.81% | -5.10% | -1.44% |
| Modiv Industrial | 6.72% | 1.42% | 0.61% |
Analyst Recommendations
This is a breakdown of recent ratings for Ares Commercial Real Estate and Modiv Industrial, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Ares Commercial Real Estate | 2 | 5 | 0 | 0 | 1.71 |
| Modiv Industrial | 0 | 0 | 1 | 0 | 3.00 |
Ares Commercial Real Estate presently has a consensus target price of $6.80, indicating a potential upside of 20.35%. Modiv Industrial has a consensus target price of $18.00, indicating a potential upside of 23.33%. Given Modiv Industrial’s stronger consensus rating and higher possible upside, analysts plainly believe Modiv Industrial is more favorable than Ares Commercial Real Estate.
Dividends
Ares Commercial Real Estate pays an annual dividend of $1.00 per share and has a dividend yield of 17.7%. Modiv Industrial pays an annual dividend of $1.15 per share and has a dividend yield of 7.9%. Ares Commercial Real Estate pays out -84.7% of its earnings in the form of a dividend. Modiv Industrial pays out -1,045.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
Insider and Institutional Ownership
41.3% of Ares Commercial Real Estate shares are held by institutional investors. Comparatively, 8.2% of Modiv Industrial shares are held by institutional investors. 2.8% of Ares Commercial Real Estate shares are held by company insiders. Comparatively, 7.4% of Modiv Industrial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Summary
Modiv Industrial beats Ares Commercial Real Estate on 10 of the 16 factors compared between the two stocks.
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.
About Modiv Industrial
Modiv Industrial, Inc. is an internally managed REIT that is focused on single-tenant net-lease industrial manufacturing real estate. The Company actively acquires critical industrial manufacturing properties with long-term leases to tenants that fuel the national economy and strengthen the nation's supply chains.
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