Chicago Atlantic Real Estate Finance (NASDAQ:REFI) versus Lument Finance Trust (NYSE:LFT) Head-To-Head Review

Lument Finance Trust (NYSE:LFT) and Chicago Atlantic Real Estate Finance (NASDAQ:REFI) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, analyst recommendations, profitability, dividends and risk.

Analyst Ratings

This is a summary of current recommendations and price targets for Lument Finance Trust and Chicago Atlantic Real Estate Finance, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lument Finance Trust	1	0	0	0	1.00
Chicago Atlantic Real Estate Finance	1	2	0	0	1.67

Chicago Atlantic Real Estate Finance has a consensus target price of $14.00, suggesting a potential upside of 38.75%. Given Chicago Atlantic Real Estate Finance’s stronger consensus rating and higher possible upside, analysts clearly believe Chicago Atlantic Real Estate Finance is more favorable than Lument Finance Trust.

Dividends

Lument Finance Trust pays an annual dividend of $0.16 per share and has a dividend yield of 23.7%. Chicago Atlantic Real Estate Finance pays an annual dividend of $1.88 per share and has a dividend yield of 18.6%. Lument Finance Trust pays out -123.1% of its earnings in the form of a dividend. 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 has increased its dividend for 2 consecutive years and Chicago Atlantic Real Estate Finance has increased its dividend for 1 consecutive years. Lument Finance Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Lument Finance Trust has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500. Comparatively, Chicago Atlantic Real Estate Finance has a beta of 0.24, indicating that its share price is 76% less volatile than the S&P 500.

Earnings & Valuation

This table compares Lument Finance Trust and Chicago Atlantic Real Estate Finance”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lument Finance Trust	$79.00 million	0.45	-$2.74 million	($0.13)	-5.20
Chicago Atlantic Real Estate Finance	$55.39 million	3.86	$36.01 million	$1.44	7.01

Chicago Atlantic Real Estate Finance has lower revenue, but higher earnings 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.

Profitability

This table compares Lument Finance Trust and Chicago Atlantic Real Estate Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lument Finance Trust	-2.59%	5.65%	0.86%
Chicago Atlantic Real Estate Finance	55.54%	11.98%	8.46%

Insider and Institutional Ownership

19.5% of Lument Finance Trust shares are owned by institutional investors. Comparatively, 25.5% of Chicago Atlantic Real Estate Finance shares are owned by institutional investors. 3.3% of Lument Finance Trust shares are owned by company insiders. Comparatively, 6.5% of Chicago Atlantic Real Estate Finance shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Chicago Atlantic Real Estate Finance beats Lument Finance Trust on 11 of the 16 factors compared between the two stocks.

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.

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.