Critical Review: AFC Gamma (NASDAQ:AFCG) & UBS Group (NYSE:UBS)

UBS Group (NYSE:UBS) and AFC Gamma (NASDAQ:AFCG) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, dividends, profitability, analyst recommendations, valuation, earnings and risk.

Risk & Volatility

UBS Group has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500. Comparatively, AFC Gamma has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.

Dividends

UBS Group pays an annual dividend of $0.36 per share and has a dividend yield of 0.8%. AFC Gamma pays an annual dividend of $0.20 per share and has a dividend yield of 6.3%. UBS Group pays out 11.9% of its earnings in the form of a dividend. AFC Gamma pays out 105.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. UBS Group has increased its dividend for 5 consecutive years.

Earnings & Valuation

This table compares UBS Group and AFC Gamma”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
UBS Group	$76.12 billion	1.96	$7.77 billion	$3.03	15.78
AFC Gamma	$31.32 million	2.29	-$20.67 million	$0.19	16.68

UBS Group has higher revenue and earnings than AFC Gamma. UBS Group is trading at a lower price-to-earnings ratio than AFC Gamma, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares UBS Group and AFC Gamma’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
UBS Group	13.36%	10.77%	0.58%
AFC Gamma	15.64%	2.85%	1.50%

Analyst Recommendations

This is a breakdown of current recommendations for UBS Group and AFC Gamma, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
UBS Group	2	4	6	0	2.33
AFC Gamma	1	1	0	0	1.50

UBS Group presently has a consensus target price of $60.30, indicating a potential upside of 26.13%. Given UBS Group’s stronger consensus rating and higher probable upside, research analysts plainly believe UBS Group is more favorable than AFC Gamma.

Institutional and Insider Ownership

26.5% of AFC Gamma shares are held by institutional investors. 1.0% of UBS Group shares are held by company insiders. Comparatively, 30.7% of AFC Gamma shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

UBS Group beats AFC Gamma on 11 of the 17 factors compared between the two stocks.

About UBS Group

UBS Group AG provides financial advice and solutions to private, institutional, and corporate clients worldwide. It operates through five divisions: Global Wealth Management, Personal & Corporate Banking, Asset Management, Investment Bank, and Non-core and Legacy. The company offers investment advice, estate and wealth planning, investing, corporate and banking, and investment management, as well as mortgage, securities-based, and structured lending solutions. It also provides personal banking products and services, such as deposits, credit and debit cards, and online and mobile banking, as well as lending, investments, retirement, and wealth management services; and corporate and institutional solutions, including equity and debt capital markets, syndicated and structured credit, private placements, leasing, traditional financing, and transaction banking solutions for payment and cash management services, trade and export finance, and global custody solutions. In addition, the company offers equities, fixed income, hedge funds, real estate and private markets, indexed and alternative beta strategies, asset allocation and currency investment strategies, customized multi-asset solutions, advisory and fiduciary services, and multi-manager hedge fund solutions and advisory services. Further, it advises clients on strategic business opportunities and helps them raise capital to fund their activities; enables its clients to buy, sell, and finance securities on capital markets and to manage their risks and liquidity; distributes, trades in, finances, and clears cash equities and equity-linked products; structures, originates, and distributes new equity and equity-linked issues; and originates, distributes, manages risk, and provides liquidity in foreign exchange, rates, credit and precious metals. The company was formerly known as UBS AG and changed its name to UBS Group AG in December 2014. UBS Group AG was founded in 1862 and is headquartered in Zurich, Switzerland.

About AFC Gamma

AFC Gamma, Inc. originates, structures, underwrites, and invests in senior secured loans, and other various commercial real estate loans and debt securities for established companies operating in the cannabis industry. It primarily originates loans structured as senior loans secured by real estate, equipment, and licenses and/or other assets of the loan parties to the extent permitted by applicable laws and the regulations governing such loan parties. The company 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. AFC Gamma, Inc. was incorporated in 2020 and is based in West Palm Beach, Florida.