Sotherly Hotels (NASDAQ:SOHO – Get Free Report) and Apollo Commercial Real Estate Finance (NYSE:ARI – Get Free Report) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, earnings, analyst recommendations, risk, profitability and valuation.
Profitability
This table compares Sotherly Hotels and Apollo Commercial Real Estate Finance’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Sotherly Hotels | 1.88% | 6.82% | 0.84% |
| Apollo Commercial Real Estate Finance | 7.30% | 9.12% | 2.09% |
Dividends
Sotherly Hotels pays an annual dividend of $0.52 per share and has a dividend yield of 42.6%. Apollo Commercial Real Estate Finance pays an annual dividend of $1.40 per share and has a dividend yield of 13.5%. Sotherly Hotels pays out -247.6% of its earnings in the form of a dividend. Apollo Commercial Real Estate Finance pays out -179.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Sotherly Hotels is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk and Volatility
Analyst Ratings
This is a breakdown of current ratings and target prices for Sotherly Hotels and Apollo Commercial Real Estate Finance, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Sotherly Hotels | 0 | 1 | 0 | 0 | 2.00 |
| Apollo Commercial Real Estate Finance | 1 | 4 | 0 | 0 | 1.80 |
Sotherly Hotels presently has a consensus price target of $1.50, suggesting a potential upside of 22.95%. Apollo Commercial Real Estate Finance has a consensus price target of $10.25, suggesting a potential downside of 1.35%. Given Sotherly Hotels’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Sotherly Hotels is more favorable than Apollo Commercial Real Estate Finance.
Institutional & Insider Ownership
27.5% of Sotherly Hotels shares are owned by institutional investors. Comparatively, 54.4% of Apollo Commercial Real Estate Finance shares are owned by institutional investors. 15.9% of Sotherly Hotels shares are owned by insiders. Comparatively, 0.7% of Apollo Commercial Real Estate Finance shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Valuation and Earnings
This table compares Sotherly Hotels and Apollo Commercial Real Estate Finance’s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Sotherly Hotels | $178.57 million | 0.14 | $3.94 million | ($0.21) | -5.81 |
| Apollo Commercial Real Estate Finance | $332.85 million | 4.44 | $58.13 million | ($0.78) | -13.32 |
Apollo Commercial Real Estate Finance has higher revenue and earnings than Sotherly Hotels. Apollo Commercial Real Estate Finance is trading at a lower price-to-earnings ratio than Sotherly Hotels, indicating that it is currently the more affordable of the two stocks.
Summary
Apollo Commercial Real Estate Finance beats Sotherly Hotels on 8 of the 15 factors compared between the two stocks.
About Sotherly Hotels
Sotherly Hotels Inc. is a self-managed and self-administered lodging REIT focused on the acquisition, renovation, upbranding and repositioning of upscale to upper-upscale full-service hotels in the Southern United States. Sotherly may also opportunistically acquire hotels throughout the United States. Currently, the Company's portfolio consists of investments in ten hotel properties, comprising 2,786 rooms, as well as interests in two condominium hotels and their associated rental programs. The Company owns hotels that operate under the Hilton Worldwide and Hyatt Hotels Corporation brands, as well as independent hotels. Sotherly Hotels Inc. was organized in 2004 and is headquartered in Williamsburg, Virginia.
About Apollo Commercial Real Estate Finance
Apollo Commercial Real Estate Finance, Inc. operates as a real estate investment trust (REIT) that originates, acquires, invests in, and manages commercial first mortgage loans, subordinate financings, and other commercial real estate-related debt investments in the United States, the United Kingdom, and Europe. It is qualified as a REIT under the Internal Revenue Code. As a REIT, it would not be subject to federal income taxes, if the company distributes at least 90% of its REIT taxable income to its stockholders. Apollo Commercial Real Estate Finance, Inc. was incorporated in 2009 and is based in New York, New York.
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