ARES COMMERCIAL REAL ESTATE (ACRE) Stock Fundamental Analysis
NYSE:ACRE - New York Stock Exchange, Inc. - US04013V1089 - REIT - Currency: USD
We assign a fundamental rating of 3 out of 10 to ACRE. ACRE was compared to 64 industry peers in the Mortgage Real Estate Investment Trusts (REITs)" industry. The financial health of ACRE is average, but there are quite some concerns on its profitability. ACRE does not seem to be growing, but still is valued expensively.
1. Profitability
1.1 Basic Checks
In the past year ACRE has reported negative net income.
ACRE had a positive operating cash flow in the past year.
In multiple years ACRE reported negative net income over the last 5 years.
Each year in the past 5 years ACRE had a positive operating cash flow.
1.2 Ratios
ACRE has a worse Return On Assets (-2.00%) than 92.19% of its industry peers.
Looking at the Return On Equity, with a value of -6.48%, ACRE is doing worse than 90.63% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -2% | ||
| ROE | -6.48% | ||
| ROIC | N/A |
ROA(3y)-0.84%
ROA(5y)0.18%
ROE(3y)-2.9%
ROE(5y)0.96%
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
ACRE has a Gross Margin (33.57%) which is comparable to the rest of the industry.
In the last couple of years the Gross Margin of ACRE has declined.
The Profit Margin and Operating Margin are not available for ACRE so they could not be analyzed.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | N/A | ||
| PM (TTM) | N/A | ||
| GM | 33.57% |
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-16.69%
GM growth 5Y-7.42%
2. Health
2.1 Basic Checks
ACRE does not have a ROIC to compare to the WACC, probably because it is not profitable.
ACRE has more shares outstanding than it did 1 year ago.
The number of shares outstanding for ACRE has been increased compared to 5 years ago.
The debt/assets ratio for ACRE has been reduced compared to a year ago.
2.2 Solvency
Based on the Altman-Z score of -0.02, we must say that ACRE is in the distress zone and has some risk of bankruptcy.
ACRE's Altman-Z score of -0.02 is in line compared to the rest of the industry. ACRE outperforms 53.13% of its industry peers.
The Debt to FCF ratio of ACRE is 33.31, which is on the high side as it means it would take ACRE, 33.31 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 33.31, ACRE is in the better half of the industry, outperforming 75.00% of the companies in the same industry.
ACRE has a Debt/Equity ratio of 2.17. This is a high value indicating a heavy dependency on external financing.
The Debt to Equity ratio of ACRE (2.17) is better than 81.25% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.17 | ||
| Debt/FCF | 33.31 | ||
| Altman-Z | -0.02 |
ROIC/WACCN/A
WACC7.3%
2.3 Liquidity
A Current Ratio of 3.60 indicates that ACRE has no problem at all paying its short term obligations.
With an excellent Current ratio value of 3.60, ACRE belongs to the best of the industry, outperforming 90.63% of the companies in the same industry.
ACRE has a Quick Ratio of 3.60. This indicates that ACRE is financially healthy and has no problem in meeting its short term obligations.
Looking at the Quick ratio, with a value of 3.60, ACRE belongs to the top of the industry, outperforming 90.63% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.6 | ||
| Quick Ratio | 3.6 |
3. Growth
3.1 Past
ACRE shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 9.72%, which is quite good.
ACRE shows a very negative growth in Revenue. In the last year, the Revenue has decreased by -13.30%.
The Revenue has been growing slightly by 4.67% on average over the past years.
EPS 1Y (TTM)9.72%
EPS 3YN/A
EPS 5YN/A
EPS Q2Q%72.6%
Revenue 1Y (TTM)-13.3%
Revenue growth 3Y4.91%
Revenue growth 5Y4.67%
Sales Q2Q%21.67%
3.2 Future
ACRE is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 69.52% yearly.
The Revenue is expected to decrease by -0.71% on average over the next years.
EPS Next Y111.43%
EPS Next 2Y69.52%
EPS Next 3YN/A
EPS Next 5YN/A
Revenue Next Year-9.21%
Revenue Next 2Y-0.71%
Revenue Next 3YN/A
Revenue Next 5YN/A
3.3 Evolution
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings Ratio is negative for ACRE. In the last year negative earnings were reported.
The Price/Forward Earnings ratio is 66.74, which means the current valuation is very expensive for ACRE.
Based on the Price/Forward Earnings ratio, ACRE is valued expensively inside the industry as 89.06% of the companies are valued cheaper.
When comparing the Price/Forward Earnings ratio of ACRE to the average of the S&P500 Index (22.70), we can say ACRE is valued expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | N/A | ||
| Fwd PE | 66.74 |
4.2 Price Multiples
ACRE's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. ACRE is cheaper than 75.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 7.69 | ||
| EV/EBITDA | N/A |
4.3 Compensation for Growth
ACRE's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
ACRE's earnings are expected to grow with 69.52% in the coming years. This may justify a more expensive valuation.
PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y69.52%
EPS Next 3YN/A
5. Dividend
5.1 Amount
ACRE has a Yearly Dividend Yield of 12.02%, which is a nice return.
The stock price of ACRE dropped by -30.34% in the last 3 months. With lower prices the dividend yield is higher, but it may be a sign investors do not trust the long term dividend.
ACRE's Dividend Yield is comparable with the industry average which is at 12.91.
Compared to an average S&P500 Dividend Yield of 2.27, ACRE pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 12.02% |
5.2 History
The dividend of ACRE decreases each year by -3.33%.
ACRE has paid a dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)-3.33%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
ACRE has negative earnings and hence a negative payout ratio. The dividend may be in danger.
DP-170.44%
EPS Next 2Y69.52%
EPS Next 3YN/A
4.96
-0.03 (-0.6%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryMortgage Real Estate Investment Trusts (REITs)"
Earnings (Last)
Earnings (Next)
Inst Owners45.32%
Inst Owner Change-92.91%
Ins Owners5.72%
Ins Owner Change5.61%
Market Cap270.52M
Analysts49.23
Price Target6.12 (23.39%)
Short Float %2.9%
Short Ratio2.11
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 12.02% |
Yearly Dividend1.1
Dividend Growth(5Y)-3.33%
DP-170.44%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-1079.48%
Min EPS beat(2)-1815.47%
Max EPS beat(2)-343.49%
EPS beat(4)1
Avg EPS beat(4)-586.93%
Min EPS beat(4)-1815.47%
Max EPS beat(4)1.1%
EPS beat(8)1
Avg EPS beat(8)-941.81%
EPS beat(12)1
Avg EPS beat(12)-646.82%
EPS beat(16)5
Avg EPS beat(16)-483.24%
Revenue beat(2)1
Avg Revenue beat(2)4.08%
Min Revenue beat(2)-2.46%
Max Revenue beat(2)10.61%
Revenue beat(4)2
Avg Revenue beat(4)0.73%
Min Revenue beat(4)-12.52%
Max Revenue beat(4)10.61%
Revenue beat(8)2
Avg Revenue beat(8)-7.72%
Revenue beat(12)6
Avg Revenue beat(12)19.94%
Revenue beat(16)10
Avg Revenue beat(16)35.37%
PT rev (1m)-14.29%
PT rev (3m)-11.76%
EPS NQ rev (1m)-125.45%
EPS NQ rev (3m)-112.5%
EPS NY rev (1m)-64.58%
EPS NY rev (3m)-82.41%
Revenue NQ rev (1m)-17.17%
Revenue NQ rev (3m)-21.74%
Revenue NY rev (1m)-2.06%
Revenue NY rev (3m)-9.26%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | N/A | ||
| Fwd PE | 66.74 | ||
| P/S | 1.54 | ||
| P/FCF | 7.69 | ||
| P/OCF | 7.61 | ||
| P/B | 0.5 | ||
| P/tB | 0.5 | ||
| EV/EBITDA | N/A |
EPS(TTM)-0.65
EYN/A
EPS(NY)0.07
Fwd EY1.5%
FCF(TTM)0.65
FCFY13.01%
OCF(TTM)0.65
OCFY13.14%
SpS3.22
BVpS9.9
TBVpS9.9
PEG (NY)N/A
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -2% | ||
| ROE | -6.48% | ||
| ROCE | N/A | ||
| ROIC | N/A | ||
| ROICexc | N/A | ||
| ROICexgc | N/A | ||
| OM | N/A | ||
| PM (TTM) | N/A | ||
| GM | 33.57% | ||
| FCFM | 20.04% |
ROA(3y)-0.84%
ROA(5y)0.18%
ROE(3y)-2.9%
ROE(5y)0.96%
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-16.69%
GM growth 5Y-7.42%
F-Score4
Asset Turnover0.1
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.17 | ||
| Debt/FCF | 33.31 | ||
| Debt/EBITDA | N/A | ||
| Cap/Depr | 7.52% | ||
| Cap/Sales | 0.2% | ||
| Interest Coverage | N/A | ||
| Cash Conversion | N/A | ||
| Profit Quality | N/A | ||
| Current Ratio | 3.6 | ||
| Quick Ratio | 3.6 | ||
| Altman-Z | -0.02 |
F-Score4
WACC7.3%
ROIC/WACCN/A
Cap/Depr(3y)N/A
Cap/Depr(5y)N/A
Cap/Sales(3y)0.07%
Cap/Sales(5y)0.1%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)9.72%
EPS 3YN/A
EPS 5YN/A
EPS Q2Q%72.6%
EPS Next Y111.43%
EPS Next 2Y69.52%
EPS Next 3YN/A
EPS Next 5YN/A
Revenue 1Y (TTM)-13.3%
Revenue growth 3Y4.91%
Revenue growth 5Y4.67%
Sales Q2Q%21.67%
Revenue Next Year-9.21%
Revenue Next 2Y-0.71%
Revenue Next 3YN/A
Revenue Next 5YN/A
EBIT growth 1Y15.88%
EBIT growth 3YN/A
EBIT growth 5YN/A
EBIT Next Year87.57%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y-24.79%
FCF growth 3Y-10.02%
FCF growth 5Y2.7%
OCF growth 1Y-24.02%
OCF growth 3Y-9.77%
OCF growth 5Y1.81%