Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI)

Sector: Real Estate Industry: REIT - Mortgage CIK: 0001467760
Market Cap 1.51 Bn
P/B 0.81
P/E 13.19
P/S 5.56
ROIC (Qtr) 1.19
Div Yield % 9.36
Rev 1y % (Qtr) 3.97
Total Debt (Qtr) 7.92 Bn
Debt/Equity (Qtr) 4.27
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About

Apollo Commercial Real Estate Finance, Inc. (ARI) operates in the real estate investment trust (REIT) industry, specializing in commercial first mortgage loans, subordinate financings, and other commercial real estate-related debt investments. The company is externally managed and advised by ACREFI Management, LLC, an indirect subsidiary of Apollo Global Management, Inc. ARI's primary business activities involve originating, acquiring, investing in, and managing commercial first mortgage loans, subordinate financings, and other commercial real...

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Investment thesis

Bull case

  • Operating cash flow of 142.52M provides strong 10.46x coverage of stock compensation 13.63M, indicating sustainable incentive practices.
  • Strong operating cash flow of 142.52M provides 2.31x coverage of SG&A expenses 61.58M, showing efficient operational cost management.
  • Cash position of 139.82M fully covers payables of 100.07M by 1.40x, showing strong vendor relationship management.

Bear case

  • Operating cash flow of 142.52M barely covers its investment activities of (1.39B), with a coverage ratio of -0.10, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 142.52M provides thin coverage of dividend payments of (141.28M) with a -1.01 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 42.31M provides weak coverage of capital expenditures of 100.21M, with a 0.42 ratio suggesting additional external financing needs for growth initiatives.
  • Free cash flow of 42.31M represents just 0.03x of debt issuance 1.23B, suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • R&D investment of 0 represents just 0x of SG&A expenses of 61.58M, indicating potential underinvestment in innovation relative to administrative overhead.

Peer comparison

Companies in the REIT - Mortgage
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NLY Annaly Capital Management Inc 14.71 Bn 7.87 6.55 116.19 Bn
2 STWD Starwood Property Trust, Inc. 6.37 Bn 17.38 3.53 21.43 Bn
3 RITM Rithm Capital Corp. 5.13 Bn 8.83 1.19 34.97 Bn
4 AGNC AGNC Investment Corp. 4.37 Bn -4.73 -5.78 95.01 Bn
5 BXMT Blackstone Mortgage Trust, Inc. 3.37 Bn 30.72 6.09 16.11 Bn
6 ARI Apollo Commercial Real Estate Finance, Inc. 1.51 Bn 13.19 5.56 7.92 Bn
7 LADR Ladder Capital Corp 1.32 Bn 20.49 6.10 3.51 Bn
8 EFC Ellington Financial Inc. 1.18 Bn 10.42 3.75 15.57 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.89 0.76
EV to Cash from Ops. EV/CFO 61.66 -6.93
EV to Debt EV to Debt 1.11 1.12
EV to EBIT EV/EBIT 69.17 167.08
EV to EBITDA EV/EBITDA 70.41 48.08
EV to Free Cash Flow [EV/FCF] EV/FCF 207.69 9.77
EV to Market Cap EV to Market Cap 5.82 21.65
EV to Revenue EV/Rev 32.36 6.17
Price to Book Value [P/B] P/B 0.81 0.54
Price to Earnings [P/E] P/E 13.19 772.25
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.75 -0.59
Dividend Payout Ratio % Div Payout % (Qtr) 123.50 -30.07
Dividend per Basic Share Div per Share (Qtr) 1.00 1.18
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 327.87 74.31
Interest Coverage Interest Coverage 0.00 -0.17
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 40.88 -29.64
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -55.95 17.79
Dividend Growth (1y) % Div 1y % (Qtr) -16.67 5.51
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 205.92 -21.86
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -20.11 -15.11
EBIT Growth (1y) % EBIT 1y % (Qtr) 206.55 -17.24
EBT Growth (1y) % EBT 1y % (Qtr) 206.55 -27.05
EPS Growth (1y) % EPS 1y % (Qtr) 183.51 -51.32
FCF Growth (1y) % FCF 1y % (Qtr) 37.59 53.49
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -10.56 -1.07
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.03 0.04
Cash Payout Ratio Cash Payout (Qtr) 0.61 0.73
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.00
Debt to Equity Ratio Debt/Equity (Qtr) 4.27 5.09
Interest Cover Ratio Interest Cover Ratio 0.00 -0.17
Times Interest Earned Times Interest Earned 0.00 -0.17
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 50.90 131.69
EBIT Margin % EBIT Margin % (Qtr) 46.78 136.71
EBT Margin % EBT Margin % (Qtr) 46.78 123.68
Gross Margin % Gross Margin % (Qtr) 100.00 113.34
Net Profit Margin % Net Margin % (Qtr) 42.10 120.00