Ares Commercial Real Estate (ACRE) beat second quarter earnings forecasts



Ares Commercial Real Estate (ACRE) reported quarterly earnings of $ 0.37 per share, beating the Zacks Consensus Estimate’s forecast of $ 0.35 per share. By comparison, a year ago earnings were $ 0.32 per share. These figures are adjusted for one-off items.

This quarterly report is a surprise of 5.71% profit. A quarter ago, this real estate investment fund was expected to generate a profit of $ 0.37 per share, when in fact it made a profit of $ 0.40, which was a surprise of 8.11%.

The company has quadrupled its earnings per share consensus over the past four quarters.

Ares Commercial Real Estate, owned by the Zacks REIT and Equity Trust, reported $ 30.86 million in revenue for the quarter ended June 2021, down 2.35% from the Zacks Consensus Estimate forecast. For comparison, a year ago, revenue was $ 29.84 million. The company beat the consensus revenue forecast three times in the past four quarters.

The resilience of the immediate share price movement, based on recently released data and expectations of future earnings, will largely depend on management commentary on the income statement.

Ares Commercial Real Estate is up about 29.1% YTD, compared to the S&P 500’s 17.7% gain.

What’s next for Ares commercial real estate?

Although Ares Commercial Real Estate has performed the best in the market this year, investors are wondering what to do next with the stock?

There are no easy answers to this key question, but one reliable metric that can help investors solve this problem is the company’s earnings forecast. This includes not only the current consensus expectations for earnings for the coming quarters, but how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock moves and trends in revised earnings estimates. Investors can track such changes on their own or rely on a proven scoring tool like the Zacks Rank, which has an impressive track record of leveraging the power to revise earnings estimates.

Ahead of this income statement, Ares Commercial Real Estate’s valuation revision trend has been mixed. Although the magnitude and direction of the revisions may change following the company’s just-published income statement, the current status is being upgraded to a Zacks # 3 (hold) rating for the stock. Thus, in the near future, the stock is expected to rise in line with market trends. You can see the full list of today’s Zacks # 1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the coming quarters and the current fiscal year change over the coming days. The current consensus estimate for EPS is $ 0.34 on revenue of $ 33.8 million in the next quarter and $ 1.42 on revenue of $ 132.4 million in the current fiscal year.

Investors should be aware that the outlook for the industry can also have a significant impact on stock returns. In terms of the Zacks industry rankings, the REIT and Equity Trust are currently in the bottom 12% of the Zacks’ over 250 industries. Our research shows that the top 50% of industries ranked by the Zacks outperform the bottom 50% by more than 2x.

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