Apollo Commercial Real Estate Finance, Inc. (ARI)
Valuation Overview•Is Apollo Commercial Real Estate Finance, Inc. Overvalued or Undervalued?
Trading at a discount across both intrinsic cash flow and relative peer multiples, indicating a strong margin of safety.
Moderate quality score of 47/100, reflecting stable operating margins and manageable leverage.
Analysts remain bullish, forecasting further upside expansion with consensus targets suggesting solid gains.
Verdict: Average quality business weighed down by significant solvency concerns.
Wall Street is broadly bullish, projecting solid upside. This outlook is strongly supported by highly attractive capital returns, anchored by a strong dividend yield, though free cash flow coverage appears tight.
ARI demonstrates adequate business quality with stable profitability. However, this is severely offset by a highly leveraged balance sheet (Debt/EBITDA > 4.0x) and elevated financial risk.
The company exhibits steady, low-single-digit revenue growth however, earnings have severely contracted over the same period. This growth is supported by elite operational efficiency, sustaining an impressive 56.0% operating margin.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $172.6M | +1.3% | +3.5% | +15.7% | +13.7% | |
| EBITDA | $26.3M | — | -9.9% | — | — | |
| Net Income | $26.2M | +205.9% | -21.8% | — | +2.1% | |
| EPS (Diluted) | $0.16 | +183.5% | -21.6% | +143.3% | -6.1% | |
| Free Cash Flow | $12.6M | +37.6% | -43.5% | -23.7% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 66.2% | 81.2% | 82.8% | 86.7% |
| Operating Margin | 56.0% | 61.7% | 77.0% | 67.1% |
| Net Margin | 17.9% | 2.8% | 20.5% | 32.8% |
| FCF Margin | 5.7% | 12.1% | 24.0% | 38.1% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $0.29 | $0.22 | -24.1% | ||
| Q1'26 | $0.27 | $0.26 | -3.7% | ||
| Q4'25 | $0.25 | $0.30 | +21.4% | ||
| Q3'25 | $0.26 | $0.26 | +0.0% | ||
| Q2'25 | $0.25 | $0.24 | -4.0% | ||
| Q1'25 | $0.23 | $0.32 | +39.1% | ||
| Q4'24 | $0.25 | $0.31 | +24.0% | ||
| Q3'24 | $0.34 | $0.35 | +2.9% |
Total return is +20.7% (1Y), lagging the benchmark by -4.3%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +12.4% | +3.1% | — |
| 1Y | +20.7% | -4.3% | +10.2% |
| 3YCAGR | +8.4% | -11.4% | +31.1% |
| 5YCAGR | +1.5% | -11.8% | +39.6% |
| 10YCAGR | +4.7% | -9.0% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Apollo Commercial Real Estate Finance, Inc. (ARI) valuation, health, and returns.
Apollo Commercial Real Estate Finance, Inc. is estimated to be undervalued under our discounted cash flow framework. relative multiples indicate the stock is Cheap versus peers compared to industry peers. undervalued (implying +148.8% upside to DCF intrinsic value of $26.94)
Apollo Commercial Real Estate Finance, Inc. has multiple valuation anchors: DCF Intrinsic Value: $26.94 | Peer Relative Fair Value: $14.09 | Wall Street Analyst Target: $12.00 (implying +10.8% upside). A convergence of these signals offers higher conviction.
Apollo Commercial Real Estate Finance, Inc. displays fair financial health with a composite quality score of 47/100, supported by a Piotroski F-Score of 6/9, Return on Invested Capital (ROIC) of 4.0%.
Apollo Commercial Real Estate Finance, Inc. pays a 9.4% dividend yield, covered by a 111% payout ratio with 0 years of growth, supplemented by a 0.0% buyback yield.
Apollo Commercial Real Estate Finance, Inc.'s current growth trajectory is Decelerating. The company achieved +1.3% 1Y revenue growth and +183.5% 1Y EPS growth, compared to its 3Y revenue CAGR of +3.5%.
Wall Street consensus is Hold based on 12 analysts, beating EPS expectations in 50% of recent quarters with a -2-quarter streak. The consensus price target represents a +10.8% change from current levels.
Investment risks for Apollo Commercial Real Estate Finance, Inc. include: -12.3% 1-year max drawdown, stretched payout ratio. Volatility risk is characterized by a beta of 0.48x.
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.