KKR Real Estate Finance Trust (NYSE: KREF) saw its share price fall to a new 52-week low of $8.27 during recent trading. The mortgage real estate investment trust, which specializes in commercial real estate loans, experienced significant trading volume as its stock dipped below previous levels.
This development comes amid mixed signals from financial analysts and a recent earnings report that showed both revenue growth and a wider-than-expected net loss. Despite the stock's performance, the company has maintained its quarterly dividend, offering a high yield to investors.
Key Takeaways
- KKR Real Estate Finance Trust's stock price reached a new 52-week low of $8.27.
- The company reported a quarterly earnings per share loss of ($0.53), missing analyst estimates.
- Despite the loss, KREF declared a quarterly dividend of $0.25 per share, resulting in an 11.8% annualized yield.
- Analyst ratings are mixed, with a consensus "Hold" rating and an average price target of $11.44.
- Institutional investors own over 70% of the company's stock, with several firms recently increasing their positions.
Stock Performance and Trading Activity
On Thursday, shares of KKR Real Estate Finance Trust declined, touching a new 52-week low of $8.27. The stock had previously closed at $8.60 and finished the day's trading session at $8.31. The trading volume was notably high, with 1,067,190 shares changing hands.
The stock's recent performance places it below key technical indicators. Its 50-day moving average price is $9.33, and its 200-day moving average is $9.29. A stock trading below these averages is often interpreted by technical analysts as a bearish signal.
The company currently has a market capitalization of approximately $555.00 million. Its beta of 0.89 suggests it is slightly less volatile than the broader market.
Analyst Perspectives and Ratings
Wall Street analysts have offered varied opinions on KREF's future. The consensus rating for the stock is currently a "Hold," based on reports from several equities research firms. The average 12-month price target among analysts is $11.44, which suggests a potential upside from its current trading level.
Recent ratings changes highlight this division:
- Weiss Ratings reiterated a "sell (d)" rating on the company's shares.
- Zacks Research upgraded its rating from "strong sell" to "hold."
- Wall Street Zen also moved its rating from "sell" to "hold."
Overall, the stock has received three "Buy" ratings, two "Hold" ratings, and one "Sell" rating from the analyst community, according to data compiled by MarketBeat. These mixed reviews reflect uncertainty about the company's near-term prospects in a challenging commercial real estate market.
Understanding Mortgage REITs
KKR Real Estate Finance Trust is a mortgage real estate investment trust (mREIT). Unlike equity REITs that own physical properties, mREITs invest in mortgages and mortgage-backed securities. Their income is primarily generated from the interest earned on these investments. This business model makes them sensitive to changes in interest rates and the health of the real estate credit market.
Financial Health and Earnings Report
The company's latest financial disclosures present a complex picture. In its last earnings report on July 22nd, KREF posted quarterly revenue of $35.75 million. This figure surpassed the consensus estimate of $32.55 million, indicating stronger-than-expected top-line performance.
However, the bottom line told a different story. The company reported a loss of ($0.53) per share for the quarter. This missed analysts' consensus estimates of a ($0.16) loss by a significant margin of $0.37 per share.
Key Financial Metrics
- Market Cap: $555.00 million
- P/E Ratio: -12.80
- Debt-to-Equity Ratio: 3.81
- Net Margin: -4.43%
- Return on Equity: 1.61%
Despite the recent quarterly loss, analysts project that KKR Real Estate Finance Trust will post full-year earnings of 1.05 per share for the current fiscal year. The company's balance sheet shows a quick ratio and current ratio of 440.20, indicating substantial liquidity. However, its debt-to-equity ratio of 3.81 points to a significant level of leverage.
Dividend Policy and Investor Yield
One of the main attractions for KREF investors is its dividend. The company recently declared a quarterly dividend of $0.25 per share, which will be paid on October 15th to stockholders of record as of September 30th.
This payout translates to an annualized dividend of $1.00 per share. Based on the recent stock price, this represents a substantial dividend yield of 11.8%. Such a high yield can be appealing to income-focused investors, especially in a low-interest-rate environment.
It is important to note, however, that the company's dividend payout ratio is currently -151.52%. A negative payout ratio occurs when a company has negative earnings (a net loss) but still pays a dividend. This situation is generally not sustainable in the long term if profitability does not improve.
Institutional Ownership Trends
A significant portion of KKR Real Estate Finance Trust's stock is held by institutional investors. Hedge funds and other large financial institutions own 70.23% of the company's shares. This high level of institutional ownership can lend stability to a stock but also means that decisions by a few large funds can have a major impact on its price.
Several institutional investors have recently increased their stakes in KREF, suggesting some see value at current prices:
- Farther Finance Advisors LLC increased its position by a remarkable 9,954.2%.
- Allworth Financial LP grew its holdings by 3,904.6%.
- EverSource Wealth Advisors LLC boosted its stake by 742.0%.
- Geneos Wealth Management Inc. doubled its position with a 100.0% increase.
These large percentage increases, while starting from small initial positions, indicate a growing interest from certain corners of the investment community. Quarry LP also initiated a new position in the company during the first quarter.
