Daily Stock Analysis: Ares Commercial Real Estate (ACRE)

Ares Commercial Real Estate Trust, known by the ticker symbol ACRE, is a small cap real estate in investment trust I put in the financial services business sector. This is my first report on ACRE for my Viital stock portfolio. I have not reviewed ACRE since I looked at it for one of my first three portfolios (of seven collected so-far).

Ares Commercial Real Estate Corp. is a specialty finance company and a Real Estate Investment Trust providing commercial real estate loans and related investments. 

five 3-storey houses in-lined on street

mage Source: Unsplash

The company operates in one segment, namely originating and managing a diversified portfolio of CRE debt-related investments. The group derives its revenues from interest income received from loans.

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.

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.

Three key data points gauge any dividend equity or fund such as Ares Commercial Real Estate Corp (ACRE):

(1) Price

(2) Dividends

(3) Returns

Those three basic keys best tell whether any company has made, is making, and will make money. 

ACRE Price

Ares's price per share was $13.86 as of yesterday's market close. One year ago its price was $12.02 Thus, Ares's share price rose over 15% in the past year.

If Ares's stock trades in the range of $12.00 to $18.00 this next year, its recent $13.86 share price might rise by $2.46 to reach $21.50 by December 21, 2022. My estimate is $0.08 higher than the median annual 1yr price target from 6 brokerage analysts tracking ACRE for brokerages

ACRE Dividends

Ares's most recent quarterly dividend of  $0.35  will pay out on January 19th, to shareholders of record on December 30th. That dividend, multiplied by four, equates to $1.40 annually and yields 10.10% per yesterday's $13.86 closing price. 

Ares Commercial Real Estate Corp (ACRE) has paid quarterly dividends increasing annually since April 2015. That will be 7 years come April.

ACRE Returns

Adding the $1.40 annual estimated Ares Commercial Real Estate Corp forward-looking dividend to my $2.64 price upside estimate shows a $4.04 potential gross gain, per share, to be reduced by any costs to trade ACRE shares.  

At yesterday's $13.86 price per share, a little under $1000 would buy 72 shares.

A $10 broker fee (if charged) would be paid half at purchase and half at sale and might cost us about $0.14 per share.

Subtract that maybe $0.14 brokerage cost from my estimated $4.04 gross gain per share results in a net gain of $3.90 X 72 shares = $280.80 for a 28.10% net gain on a $997.92  investment.

So it is that Ares Commercial Real Estate Corp (ACRE)  shows a possible 28.10% net gain including a 10.1% forward estimated dividend yield. 

Over the next year at this time, a $1000 investment in Ares Commercial Real Estate Corp (ACRE) could generate $101.00 in cash dividends alone. Note that a single share of ACRE stock bought at yesterday's closing price was $13.86. Therefore, ACRE share price is more than seven times under the dividend income from $1000.00 invested. Thus, according to my dogcatcher ideal, now is prime time to pick up Ares Commercial Real Estate Corp (ACRE)  shares. The estimated next-year dividend from $1K invested is  5.287 times Ares's single share price. Consider yourself alerted. It's a sign!   

All of the estimates above are speculation based on the past history of Ares Commercial Real Estate Corp (ACRE). Only time and money invested in this stock will determine its market value.

Disclaimer:  This article is for informational and educational purposes only and should not be construed to constitute investment advice. Nothing contained herein shall constitute a ...

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