Ares Commercial Real Estate (NYSE:ACRE) and Cousins Properties (NYSE:CUZ) Critical Survey

Ares Commercial Real Estate (NYSE:ACRE) and Cousins Properties (NYSE:CUZ) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.

Earnings & Valuation

This table compares Ares Commercial Real Estate and Cousins Properties”s 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	$88.96 million	4.37	-$38.87 million	($1.18)	-6.03
Cousins Properties	$828.41 million	5.83	$82.96 million	$0.33	96.12

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

Volatility and Risk

Ares Commercial Real Estate has a beta of 1.46, indicating that its share price is 46% more volatile than the S&P 500. Comparatively, Cousins Properties has a beta of 1.29, indicating that its share price is 29% more volatile than the S&P 500.

Dividends

Ares Commercial Real Estate pays an annual dividend of $1.00 per share and has a dividend yield of 14.0%. Cousins Properties pays an annual dividend of $1.28 per share and has a dividend yield of 4.0%. Ares Commercial Real Estate pays out -84.7% of its earnings in the form of a dividend. Cousins Properties pays out 387.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ares Commercial Real Estate is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

41.3% of Ares Commercial Real Estate shares are owned by institutional investors. Comparatively, 94.4% of Cousins Properties shares are owned by institutional investors. 2.8% of Ares Commercial Real Estate shares are owned by company insiders. Comparatively, 1.4% of Cousins Properties shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Ares Commercial Real Estate and Cousins Properties’ 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%
Cousins Properties	6.17%	1.14%	0.66%

Analyst Ratings

This is a breakdown of recent ratings and target prices for Ares Commercial Real Estate and Cousins Properties, 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
Cousins Properties	0	1	5	0	2.83

Ares Commercial Real Estate currently has a consensus price target of $7.10, suggesting a potential downside of 0.28%. Cousins Properties has a consensus price target of $31.50, suggesting a potential downside of 0.69%. Given Ares Commercial Real Estate’s higher probable upside, analysts clearly believe Ares Commercial Real Estate is more favorable than Cousins Properties.

Summary

Cousins Properties beats Ares Commercial Real Estate on 11 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 Cousins Properties

Cousins Properties Incorporated ("Cousins") is a fully integrated, self-administered, and self-managed real estate investment trust (REIT). The Company, based in Atlanta and acting through its operating partnership, Cousins Properties LP, primarily invests in Class A office buildings located in high-growth Sun Belt markets. Founded in 1958, Cousins creates shareholder value through its extensive expertise in the development, acquisition, leasing, and management of high-quality real estate assets. The Company has a comprehensive strategy in place based on a simple platform, trophy assets, and opportunistic investments.