Ladder Capital (LADR)

Commercial real estate lender Ladder Capital (NYSE:LADR) missed Wall Street’s revenue expectations in Q3 CY2025, with sales falling 15.4% year on year to $57.48 million. Its non-GAAP profit of $0.25 per share was 8.7% above analysts’ consensus estimates.

Company Overview

Founded during the 2008 financial crisis when traditional lenders retreated from commercial real estate, Ladder Capital (NYSE:LADR) is a real estate investment trust that originates commercial real estate loans, owns commercial properties, and invests in real estate securities.

Thrifts & Mortgage Finance institutions operate by accepting deposits and extending loans primarily for residential mortgages, earning revenue through interest rate spreads (difference between lending rates and borrowing costs) and origination fees. The industry benefits from demographic tailwinds as millennials enter prime homebuying age, technological advancements streamlining the loan approval process, and potential interest rate stabilization improving affordability. However, significant headwinds include net interest margin compression during rate volatility, increased competition from fintech disruptors offering digital-first experiences, mounting regulatory compliance costs, and potential housing market corrections that could impact loan portfolios and default rates.

Ladder Capital competes with other commercial real estate finance companies and REITs such as Blackstone Mortgage Trust (NYSE:BXMT), Starwood Property Trust (NYSE:STWD), and KKR Real Estate Finance Trust (NYSE:KREF), as well as traditional banks and insurance companies that provide commercial real estate financing.

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions. Over the last five years, Ladder Capital grew its revenue at an impressive 10% compounded annual growth rate. Its growth beat the average banking company and shows its offerings resonate with customers.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Ladder Capital’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 15.4% over the last two years. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Ladder Capital missed Wall Street’s estimates and reported a rather uninspiring 15.4% year-on-year revenue decline, generating $57.48 million of revenue.

Net interest income made up 32.9% of the company’s total revenue during the last five years, meaning Ladder Capital is well diversified and has a variety of income streams driving its overall growth. Nevertheless, net interest income is critical to analyze for banks because they’re considered a higher-quality, more recurring revenue source by investors.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Ladder Capital’s flat EPS over the last five years was below its 10% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Ladder Capital, its two-year annual EPS declines of 15.5% show its recent history was to blame for its underperformance over the last five years. These results were bad no matter how you slice the data.

In Q3, Ladder Capital reported adjusted EPS of $0.25, down from $0.30 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 8.7%. Over the next 12 months, Wall Street expects Ladder Capital’s full-year EPS of $0.95 to grow 14.5%.

Banks profit by intermediating between depositors and borrowers, making them fundamentally balance sheet-driven enterprises. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these institutions.

This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. EPS can become murky due to acquisition impacts or accounting flexibility around loan provisions, and TBVPS resists financial engineering manipulation.

Ladder Capital’s TBVPS was flat over the last five years. The last two years unveil a similar pattern as TBVPS was roughly flat at $11.75 per share.

Over the next 12 months, Consensus estimates call for Ladder Capital’s TBVPS to grow by 16.3% to $13.67, elite growth rate.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, Ladder Capital has averaged an ROE of 6.3%, uninspiring for a company operating in a sector where the average shakes out around 7.5%.

We were impressed by how significantly Ladder Capital blew past analysts’ net interest income expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its revenue slightly missed. Overall, this print had some key positives. Investors were likely hoping for more, and shares traded down 4% to $10.55 immediately after reporting.

Updated: December 4, 2025 at 11:40 PM EST

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

Ladder Capital falls short of our quality standards. Although its revenue growth was decent over the last five years and is expected to accelerate over the next 12 months, its TBVPS growth was weak over the last five years. And while the company’s net interest income growth was exceptional over the last five years, the downside is its weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders.

Ladder Capital’s P/B ratio based on the next 12 months is 0.9x. This multiple tells us a lot of good news is priced in - we think there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $12.60 on the company (compared to the current share price of $11.00).