Apollo Commercial (ARI) Stock Jumps 5.4%: Will It Continue to Soar?

Apollo Commercial Real Estate Finance, Inc. (ARI) shares rallied 5.4% in the last trading session to close at $8.86. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 27.6% loss over the past four weeks.

Apollo Commercial witnessed a rise in the share price for the second consecutive day. The company's performance is expected to improve in the quarters ahead on the back of rising interest rates. With the policy rate reaching the highest level since 2008 to 3.0-3.25% and additional hikes in the near term to tame raging inflation, Apollo Commercial’s portfolio of floating rate loans, collateralized by commercial real estate, is poised to gain. This is likely to drive net interest income and the bottom line. Favorable interest rate sensitivity led to bullish investor sentiments, which drove Apollo Commercial’s stock.

This real estate investment trust is expected to post quarterly earnings of $0.36 per share in its upcoming report, which represents a year-over-year change of +2.9%. Revenues are expected to be $61.9 million, up 1.9% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Apollo Commercial, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on ARI going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Apollo Commercial is part of the Zacks REIT and Equity Trust industry. New York Mortgage Trust (NYMT), another stock in the same industry, closed the last trading session 9.4% higher at $2.44. NYMT has returned -22.3% in the past month.

For New York Mortgage Trust , the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.07. This represents a change of -30% from what the company reported a year ago. New York Mortgage Trust currently has a Zacks Rank of #5 (Strong Sell).

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