Head to Head Analysis: Ready Capital (NYSE:RC) and ACRES Commercial Realty (NYSE:ACR)

ACRES Commercial Realty (NYSE:ACR) and Ready Capital (NYSE:RC) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, dividends, earnings, institutional ownership and analyst recommendations.

Institutional & Insider Ownership

40.0% of ACRES Commercial Realty shares are held by institutional investors. Comparatively, 55.9% of Ready Capital shares are held by institutional investors. 4.6% of ACRES Commercial Realty shares are held by insiders. Comparatively, 1.4% of Ready Capital shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares ACRES Commercial Realty and Ready Capital”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ACRES Commercial Realty	$79.95 million	1.21	$21.32 million	($1.12)	-12.09
Ready Capital	$569.17 million	0.48	-$228.91 million	($3.47)	-0.48

ACRES Commercial Realty has higher earnings, but lower revenue than Ready Capital. ACRES Commercial Realty is trading at a lower price-to-earnings ratio than Ready Capital, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings for ACRES Commercial Realty and Ready Capital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ACRES Commercial Realty	1	1	2	0	2.25
Ready Capital	2	3	0	0	1.60

ACRES Commercial Realty presently has a consensus target price of $24.50, suggesting a potential upside of 80.87%. Ready Capital has a consensus target price of $2.17, suggesting a potential upside of 30.13%. Given ACRES Commercial Realty’s stronger consensus rating and higher possible upside, research analysts plainly believe ACRES Commercial Realty is more favorable than Ready Capital.

Profitability

This table compares ACRES Commercial Realty and Ready Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ACRES Commercial Realty	22.62%	2.42%	0.58%
Ready Capital	-131.76%	-16.78%	-3.43%

Risk and Volatility

ACRES Commercial Realty has a beta of 1.06, meaning that its stock price is 6% more volatile than the S&P 500. Comparatively, Ready Capital has a beta of 1.48, meaning that its stock price is 48% more volatile than the S&P 500.

Summary

ACRES Commercial Realty beats Ready Capital on 10 of the 14 factors compared between the two stocks.

About ACRES Commercial Realty

ACRES Commercial Realty Corp., a real estate investment trust (REIT), focuses on the origination, holding, and management of commercial real estate mortgage loans and equity investments in commercial real estate property in the United States. It invests in commercial real estate-related assets, including floating-rate first mortgage loans, first priority interests in first mortgage loans, subordinated interests in first mortgage loans, mezzanine financing, preferred equity investments, and commercial mortgage-backed securities. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Exantas Capital Corp. and changed its name to ACRES Commercial Realty Corp. in February 2021. ACRES Commercial Realty Corp. was incorporated in 2005 and is based in Uniondale, New York.

About Ready Capital

Ready Capital Corporation operates as a real estate finance company in the United States. It operates through two segments: LMM Commercial Real Estate and Small Business Lending. The company originates, acquires, finances, and services lower-to-middle-market (LLM) commercial real estate loans, small business administration (SBA) loans, residential mortgage loans, construction loans, and mortgage-backed securities collateralized primarily by LLM loans, or other real estate-related investments. The LMM Commercial Real Estate segment originates LLM loans across the full life-cycle of an LLM property, including construction, bridge, stabilized, and agency loan origination channels. The Small Business Lending segment acquires, originates, and services owner-occupied loans guaranteed by the SBA under its SBA Section 7(a) Program; and acquires purchased future receivables. The company has elected to be taxed as a real estate investment trust (REIT) and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Sutherland Asset Management Corporation and changed its name to Ready Capital Corporation in September 2018. Ready Capital Corporation was founded in 2007 and is headquartered in New York, New York.