Ares Commercial Real Estate (ACRE) Upgraded to Buy: What Does It Mean for the Stock?

Core Viewpoint - Ares Commercial Real Estate (ACRE) has received a Zacks Rank 2 (Buy) upgrade, indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Ratings - The Zacks rating system is based on changes in earnings estimates, which are tracked through the Zacks Consensus Estimate from sell-side analysts for the current and following years [2]. - A significant correlation exists between changes in earnings estimates and near-term stock price movements, making the Zacks rating system valuable for investors [3][5]. Impact of Institutional Investors - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [5]. Business Outlook for ACRE - The upgrade in ACRE's rating reflects an improvement in its underlying business, suggesting that investors may respond positively by driving the stock price higher [6]. Earnings Estimate Revisions - For the fiscal year ending December 2025, ACRE is expected to earn -$0.43 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 42.4% over the past three months [9]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks which have averaged a +25% annual return since 1988 [8]. - ACRE's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10][11].