Medical Properties Trust (NYSE:MPW – Get Free Report) and Ares Commercial Real Estate (NYSE:ACRE – Get Free Report) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, profitability, dividends, analyst recommendations, risk, valuation and institutional ownership.
Profitability
This table compares Medical Properties Trust and Ares Commercial Real Estate’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Medical Properties Trust | N/A | -38.83% | -15.05% |
| Ares Commercial Real Estate | -50.24% | -8.64% | -2.51% |
Risk and Volatility
Medical Properties Trust has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500. Comparatively, Ares Commercial Real Estate has a beta of 1.57, meaning that its stock price is 57% more volatile than the S&P 500.
Earnings & Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Medical Properties Trust | $995.55 million | 3.64 | -$556.48 million | ($3.80) | -1.59 |
| Ares Commercial Real Estate | -$15.23 million | -16.69 | -$34.99 million | ($0.65) | -7.13 |
Ares Commercial Real Estate has lower revenue, but higher earnings than Medical Properties Trust. Ares Commercial Real Estate is trading at a lower price-to-earnings ratio than Medical Properties Trust, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
71.8% of Medical Properties Trust shares are owned by institutional investors. Comparatively, 41.3% of Ares Commercial Real Estate shares are owned by institutional investors. 1.5% of Medical Properties Trust shares are owned by company insiders. Comparatively, 2.8% of Ares Commercial Real Estate shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Analyst Ratings
This is a breakdown of current ratings and recommmendations for Medical Properties Trust and Ares Commercial Real Estate, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Medical Properties Trust | 1 | 5 | 2 | 0 | 2.13 |
| Ares Commercial Real Estate | 1 | 5 | 0 | 0 | 1.83 |
Medical Properties Trust currently has a consensus target price of $5.64, indicating a potential downside of 6.50%. Ares Commercial Real Estate has a consensus target price of $5.81, indicating a potential upside of 25.40%. Given Ares Commercial Real Estate’s higher possible upside, analysts clearly believe Ares Commercial Real Estate is more favorable than Medical Properties Trust.
Dividends
Medical Properties Trust pays an annual dividend of $0.32 per share and has a dividend yield of 5.3%. Ares Commercial Real Estate pays an annual dividend of $0.60 per share and has a dividend yield of 12.9%. Medical Properties Trust pays out -8.4% of its earnings in the form of a dividend. Ares Commercial Real Estate pays out -92.3% 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. Ares Commercial Real Estate is clearly the better dividend stock, given its higher yield and lower payout ratio.
Summary
Ares Commercial Real Estate beats Medical Properties Trust on 9 of the 16 factors compared between the two stocks.
About Medical Properties Trust
Medical Properties Trust, Inc. is a self-advised real estate investment trust formed in 2003 to acquire and develop net-leased hospital facilities. From its inception in Birmingham, Alabama, the Company has grown to become one of the world's largest owners of hospital real estate with 441 facilities and approximately 44,000 licensed beds as of September 30, 2023. Since the end of the third quarter, the Company has sold four facilities and now owns approximately 43,000 licensed beds in nine countries across three continents. MPT's financing model facilitates acquisitions and recapitalizations and allows operators of hospitals to unlock the value of their real estate assets to fund facility improvements, technology upgrades and other investments in operations.
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.
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