Chicago Atlantic Real Estate Finance (NASDAQ:REFI – Get Free Report) and Lument Finance Trust (NYSE:LFT – Get Free Report) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, institutional ownership, risk, analyst recommendations, profitability, earnings and valuation.
Analyst Ratings
This is a breakdown of current ratings for Chicago Atlantic Real Estate Finance and Lument Finance Trust, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Chicago Atlantic Real Estate Finance | 1 | 2 | 0 | 0 | 1.67 |
| Lument Finance Trust | 1 | 0 | 0 | 0 | 1.00 |
Chicago Atlantic Real Estate Finance presently has a consensus price target of $14.00, suggesting a potential upside of 36.85%. Given Chicago Atlantic Real Estate Finance’s stronger consensus rating and higher possible upside, equities analysts plainly believe Chicago Atlantic Real Estate Finance is more favorable than Lument Finance Trust.
Risk & Volatility
Profitability
This table compares Chicago Atlantic Real Estate Finance and Lument Finance Trust’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Chicago Atlantic Real Estate Finance | 55.54% | 11.98% | 8.46% |
| Lument Finance Trust | -2.59% | 5.65% | 0.86% |
Earnings & Valuation
This table compares Chicago Atlantic Real Estate Finance and Lument Finance Trust”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Chicago Atlantic Real Estate Finance | $55.39 million | 3.92 | $36.01 million | $1.44 | 7.10 |
| Lument Finance Trust | $79.00 million | 0.46 | -$2.74 million | ($0.13) | -5.28 |
Chicago Atlantic Real Estate Finance has higher earnings, but lower revenue than Lument Finance Trust. Lument Finance Trust is trading at a lower price-to-earnings ratio than Chicago Atlantic Real Estate Finance, indicating that it is currently the more affordable of the two stocks.
Dividends
Chicago Atlantic Real Estate Finance pays an annual dividend of $1.88 per share and has a dividend yield of 18.4%. Lument Finance Trust pays an annual dividend of $0.16 per share and has a dividend yield of 23.3%. Chicago Atlantic Real Estate Finance pays out 130.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lument Finance Trust pays out -123.1% of its earnings in the form of a dividend. Chicago Atlantic Real Estate Finance has increased its dividend for 1 consecutive years and Lument Finance Trust has increased its dividend for 2 consecutive years. Lument Finance Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider & Institutional Ownership
25.5% of Chicago Atlantic Real Estate Finance shares are owned by institutional investors. Comparatively, 19.5% of Lument Finance Trust shares are owned by institutional investors. 6.5% of Chicago Atlantic Real Estate Finance shares are owned by company insiders. Comparatively, 3.3% of Lument Finance Trust shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Summary
Chicago Atlantic Real Estate Finance beats Lument Finance Trust on 11 of the 16 factors compared between the two stocks.
About Chicago Atlantic Real Estate Finance
Chicago Atlantic Real Estate Finance, Inc. operates as a commercial real estate finance company in the United States. The company engages in originating, structuring, and investing in first mortgage loans and alternative structured financings secured by commercial real estate properties. Its portfolio primarily includes offers senior loans to state-licensed operators in the cannabis industry. The company has elected to be taxed as a real estate investment trust (REIT) and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. Chicago Atlantic Real Estate Finance, Inc. was incorporated in 2021 and is headquartered in Chicago, Illinois.
About Lument Finance Trust
Lument Finance Trust, Inc., a real estate investment trust, focuses on investing in, financing, and managing a portfolio of commercial real estate (CRE) debt investments in the United States. The company primarily invests in transitional floating rate CRE mortgage loans on middle market multi-family assets; and other CRE -related investments, including mezzanine loans, preferred equity, commercial mortgage-backed securities, fixed rate loans, construction loans, and other CRE debt instruments. Lument Finance Trust, Inc. is qualified as a real estate investment trust (REIT) under the Internal Revenue Code of 1986. As a REIT, it would not be subject to federal income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Hunt Companies Finance Trust, Inc. and changed its name to Lument Finance Trust, Inc. in December 2020. Lument Finance Trust, Inc. was incorporated in 2012 and is headquartered in New York, New York.
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