Comparing Ares Commercial Real Estate (NYSE:ACRE) & Sabra Health Care REIT (NASDAQ:SBRA)

Ares Commercial Real Estate (NYSE:ACRE) and Sabra Health Care REIT (NASDAQ:SBRA) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, institutional ownership, earnings, profitability and dividends.

Risk and Volatility

Ares Commercial Real Estate has a beta of 1.48, meaning that its stock price is 48% more volatile than the S&P 500. Comparatively, Sabra Health Care REIT has a beta of 1.24, meaning that its stock price is 24% more volatile than the S&P 500.

Institutional and Insider Ownership

41.3% of Ares Commercial Real Estate shares are owned by institutional investors. Comparatively, 99.4% of Sabra Health Care REIT shares are owned by institutional investors. 2.8% of Ares Commercial Real Estate shares are owned by insiders. Comparatively, 1.1% of Sabra Health Care REIT shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Ares Commercial Real Estate and Sabra Health Care REIT”s gross 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	4.28	-$38.87 million	($1.18)	-5.92
Sabra Health Care REIT	$647.51 million	6.67	$13.76 million	$0.41	44.54

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

Analyst Ratings

This is a summary of recent recommendations for Ares Commercial Real Estate and Sabra Health Care REIT, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ares Commercial Real Estate	2	4	0	0	1.67
Sabra Health Care REIT	0	2	5	0	2.71

Ares Commercial Real Estate presently has a consensus price target of $7.10, indicating a potential upside of 1.65%. Sabra Health Care REIT has a consensus price target of $19.14, indicating a potential upside of 4.83%. Given Sabra Health Care REIT’s stronger consensus rating and higher probable upside, analysts clearly believe Sabra Health Care REIT is more favorable than Ares Commercial Real Estate.

Profitability

This table compares Ares Commercial Real Estate and Sabra Health Care REIT’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%
Sabra Health Care REIT	14.20%	3.51%	1.81%

Dividends

Ares Commercial Real Estate pays an annual dividend of $1.00 per share and has a dividend yield of 14.3%. Sabra Health Care REIT pays an annual dividend of $1.20 per share and has a dividend yield of 6.6%. Ares Commercial Real Estate pays out -84.7% of its earnings in the form of a dividend. Sabra Health Care REIT pays out 292.7% 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.

Summary

Sabra Health Care REIT beats Ares Commercial Real Estate on 12 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 Sabra Health Care REIT

As of September 30, 2023, Sabra's investment portfolio included 377 real estate properties held for investment (consisting of (i) 240 Skilled Nursing/Transitional Care facilities, (ii) 43 senior housing communities (Senior Housing – Leased), (iii) 61 senior housing communities operated by third-party property managers pursuant to property management agreements (Senior Housing – Managed), (iv) 18 Behavioral Health facilities and (v) 15 Specialty Hospitals and Other facilities), 12 investments in loans receivable (consisting of two mortgage loans and 10 other loans), five preferred equity investments and two investments in unconsolidated joint ventures. As of September 30, 2023, Sabra's real estate properties held for investment included 37,606 beds/units, spread across the United States and Canada.