Ares Commercial Real Estate Corporation (ACRE)
Valuation Overview•Is Ares Commercial Real Estate Corporation Overvalued or Undervalued?
Commands a premium valuation multiple over its peers, likely pricing in superior execution.
Fragile underlying quality score of 29/100; weak margins or elevated debt leverage warrant caution.
Analysts remain bullish, forecasting further upside expansion with consensus targets suggesting solid gains.
Verdict: Mixed fundamental profile with offsetting strengths and weaknesses.
Wall Street is broadly bullish, projecting solid upside alongside robust expected earnings growth. This outlook is strongly supported by highly attractive capital returns, anchored by a strong dividend yield, though free cash flow coverage appears tight.
ACRE struggles with subpar profitability and pressured margins. However, this is severely offset by a highly leveraged balance sheet (Debt/EBITDA > 4.0x) and elevated financial risk.
The company is facing top-line contraction (-7.8% 3Y CAGR) paired with stable bottom-line earnings. Operating efficiency remains adequate with margins around 13.6%.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $27.5M | -2.8% | -7.8% | +1.6% | +0.1% | |
| EBITDA | $8.7M | — | — | — | — | |
| Net Income | -$9.6M | +97.4% | — | — | — | |
| EPS (Diluted) | $-0.17 | +97.4% | — | — | — | |
| Free Cash Flow | -$56.6M | -44.5% | -29.9% | -8.9% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 70.0% | 85.8% | 87.8% | 89.8% |
| Operating Margin | 13.6% | -705.7% | -514.3% | -248.5% |
| Net Margin | -24.9% | -1190.4% | -696.9% | -318.4% |
| FCF Margin | -55.1% | 1437.8% | 882.6% | 464.9% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $0.08 | $0.06 | -25.0% | ||
| Q1'26 | $0.01 | $0.15 | +1400.0% | ||
| Q4'25 | $-0.09 | $0.10 | +211.1% | ||
| Q3'25 | $-0.02 | $-0.51 | -2450.0% | ||
| Q2'25 | $-0.07 | $0.13 | +285.7% | ||
| Q1'25 | $0.06 | $-0.15 | -350.0% | ||
| Q4'24 | $0.11 | $0.07 | -36.4% | ||
| Q3'24 | $0.19 | $-0.12 | -163.2% |
Total return is +8.1% (1Y), lagging the benchmark by -16.9%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +0.8% | -8.5% | — |
| 1Y | +8.1% | -16.9% | +12.4% |
| 3YCAGR | -10.1% | -29.7% | +27.2% |
| 5YCAGR | -6.8% | -21.5% | +38.5% |
| 10YCAGR | +2.7% | -10.9% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Ares Commercial Real Estate Corporation (ACRE) valuation, health, and returns.
Based on peer relative multiples, Ares Commercial Real Estate Corporation appears Expensive versus peers compared to industry peers.
Ares Commercial Real Estate Corporation has multiple valuation anchors: Peer Relative Fair Value: $3.22 | Wall Street Analyst Target: $5.25 (implying +13.6% upside). A convergence of these signals offers higher conviction.
Ares Commercial Real Estate Corporation displays weak financial health with a composite quality score of 29/100, supported by a Piotroski F-Score of 5/9, Return on Invested Capital (ROIC) of 2.9%.
Ares Commercial Real Estate Corporation pays a 15.4% dividend yield, covered by a 0% payout ratio with 0 years of growth, supplemented by a 0.0% buyback yield.
Ares Commercial Real Estate Corporation's current growth trajectory is Accelerating. The company achieved -2.8% 1Y revenue growth and +97.4% 1Y EPS growth, compared to its 3Y revenue CAGR of -7.8%.
Wall Street consensus is Buy based on 13 analysts, beating EPS expectations in 50% of recent quarters with a -1-quarter streak. The consensus price target represents a +13.6% change from current levels.
Investment risks for Ares Commercial Real Estate Corporation include: -19.4% 1-year max drawdown. Volatility risk is characterized by a beta of 0.84x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.