On Friday, Keefe, Bruyette & Woods revised their price target on shares of Ares Commercial (NYSE:ACRE), bringing it down to $7.00 from the previous $7.50. The firm has chosen to maintain a Market Perform rating on the stock.
This adjustment comes in the wake of the first quarter results, leading to a reduction in forward estimates. The firm anticipates a $9 million, or $0.17 per share, realized loss in the second quarter of 2024. This expectation is based on a combination of a smaller portfolio size and lower origination volumes for Ares Commercial.
The firm's analysis suggests that excluding credit impacts, earnings per share (EPS) could average $0.18 per quarter. Additionally, there is an expectation set that Ares Commercial may consider reducing its dividend to $0.20. Despite the shares appearing somewhat attractive at 0.6 times book value compared to a 0.7 times average among peers, the anticipated 11.8% pro forma dividend yield, assuming a dividend cut, aligns with market standards.
InvestingPro Insights
In light of Keefe, Bruyette & Woods' recent price target adjustment for Ares Commercial (NYSE:ACRE), real-time data and insights from InvestingPro provide a deeper understanding of the company's financial health and market performance. A significant dividend yield of 15.04% stands out, particularly as ACRE has a history of maintaining dividend payments for 13 consecutive years, according to InvestingPro Tips. This consistency in dividend payments is noteworthy for income-focused investors.
However, caution may be warranted as analysts do not anticipate ACRE to be profitable this year, and the company was not profitable over the last twelve months. Additionally, the price of ACRE shares has fallen by 19.47% over the last three months, reflecting potential investor concerns. The InvestingPro Data further reveals a challenging revenue picture, with a substantial decline in revenue growth of -116.1% over the last twelve months as of Q1 2024. Despite these challenges, ACRE's liquid assets exceed its short-term obligations, which could provide some financial stability.
For investors looking to dive deeper into ACRE's financials and future prospects, InvestingPro offers additional insights. There are more InvestingPro Tips available, providing a comprehensive analysis of ACRE's performance and valuation metrics. For those interested in leveraging these insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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