Apollo Real Estate (ARI) AI Stock Analysis

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Apollo Real Estate

(NYSE:ARI)

66Neutral

Apollo Real Estate's stock is supported by stable financial performance with improving profitability and strong cash flows, though challenged by high leverage. The technical indicators show positive momentum, but valuation concerns persist due to the negative P/E ratio, despite an attractive dividend yield. The earnings call underscores portfolio growth but also highlights earnings challenges and market volatility. Overall, the stock presents a balanced risk-reward profile with significant strengths and notable risks.

Positive Factors

Asset Management

ARI has shown strong asset management capabilities by resolving hospital loan challenges quicker than expected and experiencing a sales uplift at Steinway Tower.

Investment Rating

ARI shares trade at a lower book value, offering a potentially attractive investment with an upgraded rating to Buy and a higher price target.

Loan Origination

With a strong track record of securing new loan commitments and support from Apollo, ARI is expected to surprise with new loan volume activity despite macroeconomic headwinds.

Negative Factors

Book Value

Book value, after deducting CECL reserves from equity, decreased to $12.30/share from $13.20/share due to the $0.93 per share realized loss in the quarter.

Loan Portfolio

The total committed loan portfolio sat at $7.1B, a decrease of 8.8% from September 30.

Realized Losses

A $127.5M realized loss was related to the write-down of a loan backed by a healthcare property portfolio in Massachusetts.

Apollo Real Estate (ARI) vs. S&P 500 (SPY)

Market Cap

$1.30B

Dividend Yield11.55%

Average Volume (3M)1.47M

Price to Earnings (P/E)―

Beta (1Y)1.01

Revenue Growth-14.98%

EPS Growth95.53%

CountryUS

EmployeesN/A

SectorReal Estate

Sector Strength83

IndustryREIT - Mortgage

Share Statistics

EPS (TTM)-0.04

Shares Outstanding138,943,830

10 Day Avg. Volume1,561,255

30 Day Avg. Volume1,469,316

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap6.13

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit26.27

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$9.80

Price Target Upside4.59% Upside

Rating ConsensusHold

Number of Analyst Covering6

Apollo Real Estate Business Overview & Revenue Model

Company DescriptionApollo 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. 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 founded in 2009 and is based in New York, New York.

How the Company Makes MoneyApollo Real Estate makes money primarily through rental income generated from its diverse portfolio of commercial and residential properties. The company also earns revenue from property management fees, leasing commissions, and advisory services provided to clients and investors. Additionally, ARI capitalizes on property appreciation by strategically acquiring and disposing of assets to achieve capital gains. Significant partnerships with financial institutions and real estate developers enhance its acquisition capabilities and expand its investment opportunities, further contributing to its earnings.

Apollo Real Estate Financial Statement Overview

Summary

Apollo Real Estate's financial statements reflect a mixed performance. The company shows potential with revenue growth and reduced debt, yet faces challenges in profitability and equity stability. Key strengths include a strong cash position and improved leverage. However, persistent negative net income and reduced stockholders' equity could affect future growth and financial health.

Income Statement

Neutral

The income statement shows a challenging profitability scenario. The gross profit margin was high at 100% in 2024 due to the absence of cost of goods sold, but the company reported a significant net loss of -$119.6 million, leading to a negative net profit margin. Revenue growth from 2023 to 2024 was modest at 6.5%, indicating some positive trajectory. However, the negative net income highlights issues in cost management or operational efficiency.

Balance Sheet

Neutral

The balance sheet indicates a stable financial structure with total debt reduced to zero in 2024, improving the debt-to-equity ratio significantly. The equity ratio stands at 22.3% for 2024, suggesting moderate leverage. Despite these improvements, the company has shown declining stockholders’ equity over the years, which could pose long-term risks.

Cash Flow

Neutral

Cash flow analysis reveals stable operating cash flow with a positive free cash flow in 2024. However, there is a decrease in operating cash flow from 2023, and the free cash flow to net income ratio is difficult to evaluate due to negative net income. Consistent positive free cash flow is a strength, but the fluctuations in net income require attention.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
303.67M	285.16M	65.12M	278.31M	210.58M
	Gross Profit
303.67M	166.18M	-26.37M	217.59M	170.83M
	EBIT
274.02M	0.00	472.52M	223.51M	18.38M
	EBITDA
-634.86M	0.00	-704.00K	0.00	0.00
	Net Income Common Stockholders
-119.64M	58.13M	-5.29M	223.51M	18.38M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
317.40M	225.44M	222.03M	343.11M	325.50M
	Total Assets
8.41B	9.30B	9.57B	8.42B	6.94B
	Total Debt
6.39B	6.95B	2.30B	2.01B	1.23B
	Net Debt
6.07B	6.73B	2.08B	1.67B	909.39M
	Total Liabilities
6.54B	7.09B	7.21B	6.12B	4.67B
	Stockholders Equity
1.87B	2.21B	2.35B	2.29B	2.27B
Cash Flow		Free Cash Flow
30.75M	201.23M	234.67M	199.25M	164.05M
	Operating Cash Flow
200.26M	273.86M	267.70M	199.38M	164.05M
	Investing Cash Flow
577.17M	68.42M	-1.34B	-1.36B	-215.72M
	Financing Cash Flow
-689.31M	-343.36M	957.97M	1.18B	-75.12M

Apollo Real Estate Technical Analysis

Technical Analysis Sentiment

Positive

Last Price9.37

Price Trends

50DMA

9.28

Positive

100DMA

9.01

Positive

200DMA

9.01

Positive

Market Momentum

MACD

0.03

Negative

RSI

57.81

Neutral

STOCH

93.03

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARI, the sentiment is Positive. The current price of 9.37 is above the 20-day moving average (MA) of 8.71, above the 50-day MA of 9.28, and above the 200-day MA of 9.01, indicating a bullish trend. The MACD of 0.03 indicates Negative momentum. The RSI at 57.81 is Neutral, neither overbought nor oversold. The STOCH value of 93.03 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ARI.

Apollo Real Estate Risk Analysis

Apollo Real Estate disclosed 67 risk factors in its most recent earnings report. Apollo Real Estate reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Apollo Real Estate Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ARI	66 Neutral	$1.30B	―	0.41%	11.55%	-14.98%	95.53%
EFC	65 Neutral	$1.24B	9.76	9.45%	11.79%	11.91%	52.26%
DX	60 Neutral	$1.19B	16.04	6.01%	13.63%	13.67%	-34.10%
Sector *	60 Neutral	$2.73B	11.44	0.07%	8661.49%	5.94%	-15.68%
PMT	54 Neutral	$1.12B	13.78	6.36%	12.46%	-5.51%	-43.96%
TWO	53 Neutral	$1.23B	5.06	0.63%	14.49%	-18.22%	-114.40%
ARR	48 Neutral	$1.35B	8.01	-0.11%	17.49%	142.18%	50.74%

* Real Estate Sector Average

Performance Comparison

ARI

Apollo Real Estate

9.42

0.42

4.67%

ARR

ARMOUR Residential REIT

16.47

0.31

1.92%

Dynex Capital

12.19

1.73

16.54%

EFC

Ellington Financial

13.03

2.73

26.50%

TWO

Two Harbors

11.87

0.69

6.17%

PMT

PennyMac Mortgage

12.81

-0.05

-0.39%

Apollo Real Estate Earnings Call Summary

Earnings Call Date:Apr 24, 2025

(Q1-2025)

% Change Since: 3.08%|

Next Earnings Date:Jul 30, 2025

Earnings Call Sentiment Neutral

The call highlighted strong loan origination and portfolio growth, along with successful asset sales and expanded credit facilities. However, earnings were slightly below the dividend rate, and capital markets volatility remains a concern. The presence of significant specific allowances on non-accruing assets also poses challenges.

Q1-2025 Updates

Positive Updates

Strong Loan Origination

ARI committed to $650 million of new loans in Q1, with a year-to-date volume of $1.5 billion, including add-on funding.

Increased Portfolio Value

The loan portfolio ended the quarter with a carrying value of $7.7 billion, up from $7.1 billion at year-end.

Positive Activity in Sales

The closing of three units at 111 West 57th Street generated $45 million in net proceeds, with continued strong sales momentum.

Expansion of Secured Credit Facilities

ARI upsized its facility with J.P. Morgan by $500 million, bringing total capacity to $2 billion, and extended maturities on key facilities.

Negative Updates

Earnings Below Dividend Rate

Q1 earnings were slightly lower than the current quarterly dividend rate, covering 96% of the quarterly dividends.

Capital Markets Volatility

Increased volatility has led to modest spread widening and a more cautious tone in the market.

Specific Allowances on Non-Accruing Assets

Significant specific allowances were noted, with almost $500 million in non-accruing assets.

Company Guidance

In the first quarter of 2025, Apollo Commercial Real Estate Finance, Inc. (ARI) reported $650 million in new loan commitments, primarily for residential properties in the U.S., with data center construction also highlighted. The company's loan portfolio stood at $7.7 billion across 48 loans, with a weighted average yield of 7.9%. Distributable earnings were $33 million, or $0.24 per share, slightly below the quarterly dividend rate, covering 96% of the dividends. ARI's loan origination efforts, totaling over $5 billion in Q1, were bolstered by strong relationships and a broad-based credit origination strategy. The company expects $1.5 billion in repayments throughout the year, with plans for continued portfolio growth. Despite macroeconomic volatility, ARI is confident in its portfolio's ability to support current dividend rates and remains proactive in asset management, particularly resolving focus assets like 111 West 57th Street, which saw significant sales momentum.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.