Head-To-Head Analysis: Ares Commercial Real Estate (ACRE) & Tanger Factory Outlet Centers (SKT)

Ares Commercial Real Estate (NYSE: ACRE) and Tanger Factory Outlet Centers (NYSE:SKT) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, risk, profitability, valuation, earnings and dividends.

Volatility & Risk

Ares Commercial Real Estate has a beta of 0.64, indicating that its share price is 36% less volatile than the S&P 500. Comparatively, Tanger Factory Outlet Centers has a beta of 0.52, indicating that its share price is 48% less volatile than the S&P 500.

Dividends

Ares Commercial Real Estate pays an annual dividend of $1.12 per share and has a dividend yield of 8.0%. Tanger Factory Outlet Centers pays an annual dividend of $1.40 per share and has a dividend yield of 5.8%. Ares Commercial Real Estate pays out 100.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Tanger Factory Outlet Centers pays out 56.9% of its earnings in the form of a dividend. Ares Commercial Real Estate has increased its dividend for 2 consecutive years and Tanger Factory Outlet Centers has increased its dividend for 25 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Ares Commercial Real Estate and Tanger Factory Outlet Centers, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ares Commercial Real Estate 0 3 2 0 2.40
Tanger Factory Outlet Centers 3 3 0 0 1.50

Ares Commercial Real Estate presently has a consensus target price of $14.13, indicating a potential upside of 1.47%. Tanger Factory Outlet Centers has a consensus target price of $23.25, indicating a potential downside of 3.08%. Given Ares Commercial Real Estate’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Ares Commercial Real Estate is more favorable than Tanger Factory Outlet Centers.

Earnings and Valuation

This table compares Ares Commercial Real Estate and Tanger Factory Outlet Centers’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ares Commercial Real Estate $97.54 million 4.08 $30.40 million $1.11 12.54
Tanger Factory Outlet Centers $488.23 million 4.65 $68.00 million $2.46 9.75

Tanger Factory Outlet Centers has higher revenue and earnings than Ares Commercial Real Estate. Tanger Factory Outlet Centers is trading at a lower price-to-earnings ratio than Ares Commercial Real Estate, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Ares Commercial Real Estate and Tanger Factory Outlet Centers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ares Commercial Real Estate 32.04% 8.14% 2.02%
Tanger Factory Outlet Centers 13.85% 10.97% 2.68%

Institutional and Insider Ownership

66.1% of Ares Commercial Real Estate shares are held by institutional investors. 2.0% of Ares Commercial Real Estate shares are held by insiders. Comparatively, 2.1% of Tanger Factory Outlet Centers shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Tanger Factory Outlet Centers beats Ares Commercial Real Estate on 9 of the 17 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 loans and related investments in the United States. It provides a range of financing solutions for the owners, operators, and sponsors of commercial real estate (CRE) properties. The company originates senior mortgage loans, subordinate debt products, mezzanine loans, real estate preferred equity investments, and other CRE investments. Ares Commercial Real Estate Corporation has elected and qualified to be taxed as a real estate investment trust (REIT) for the United States federal income tax purposes under the Internal Revenue Code of 1986. As a REIT, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. Ares Commercial Real Estate Management LLC operates as the manager of the company. The company was founded in 2011 and is headquartered in New York, New York.

About Tanger Factory Outlet Centers

Tanger Factory Outlet Centers, Inc. (NYSE: SKT), is a publicly-traded REIT headquartered in Greensboro, North Carolina that operates and owns, or has an ownership interest in, a portfolio of 44 upscale outlet shopping centers. Tanger's operating properties are located in 22 states coast to coast and in Canada, totaling approximately 15.3 million square feet leased to over 3,100 stores operated by more than 500 different brand name companies. The Company has more than 37 years experience in the outlet industry. Tanger Outlet Centers continue to attract more than 188 million shoppers annually.

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