Gladstone Land Corp (NASDAQ: LAND) and Drive Shack (NYSE:DS) are both small-cap financials companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, analyst recommendations, valuation, profitability, earnings and risk.

Risk & Volatility

Gladstone Land Corp has a beta of 1.03, indicating that its share price is 3% more volatile than the S&P 500. Comparatively, Drive Shack has a beta of 1.14, indicating that its share price is 14% more volatile than the S&P 500.

Dividends

Gladstone Land Corp pays an annual dividend of $0.53 per share and has a dividend yield of 3.8%. Drive Shack pays an annual dividend of $0.24 per share and has a dividend yield of 9.2%. Gladstone Land Corp pays out 1,060.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Drive Shack pays out -68.6% of its earnings in the form of a dividend. Drive Shack is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Gladstone Land Corp and Drive Shack’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Gladstone Land Corp $21.14 million 7.85 $15.48 million $0.05 276.26
Drive Shack $292.74 million 0.60 $8.22 million ($0.35) -7.46

Gladstone Land Corp has higher revenue, but lower earnings than Drive Shack. Drive Shack is trading at a lower price-to-earnings ratio than Gladstone Land Corp, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings and price targets for Gladstone Land Corp and Drive Shack, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gladstone Land Corp 0 0 2 0 3.00
Drive Shack 0 1 0 0 2.00

Gladstone Land Corp currently has a consensus target price of $14.25, suggesting a potential upside of 3.19%. Drive Shack has a consensus target price of $3.75, suggesting a potential upside of 43.68%. Given Drive Shack’s higher probable upside, analysts clearly believe Drive Shack is more favorable than Gladstone Land Corp.

Insider and Institutional Ownership

24.7% of Gladstone Land Corp shares are held by institutional investors. Comparatively, 41.8% of Drive Shack shares are held by institutional investors. 21.9% of Gladstone Land Corp shares are held by insiders. Comparatively, 7.2% of Drive Shack shares are held by 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.

Profitability

This table compares Gladstone Land Corp and Drive Shack’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gladstone Land Corp 4.25% 0.97% 0.25%
Drive Shack -7.05% 25.92% 3.08%

Summary

Drive Shack beats Gladstone Land Corp on 8 of the 15 factors compared between the two stocks.

Gladstone Land Corp Company Profile

Gladstone Land Corporation is an agricultural real estate investment trust (REIT). The Company is engaged in the business of owning and leasing farmland. The Company also owns various farm-related facilities, such as cooling facilities, buildings utilized for the storage and assembly of boxes for shipping produce (box barns), packinghouses, processing facilities and various storage facilities. The Company is engaged in leasing its farms and farm-related facilities to independent or corporate farming operations. As of July 17, 2017, the Company owned 69 farms, including 58,777 total acres across seven states in the United States (Arizona, California, Colorado, Florida, Michigan, Nebraska and Oregon). As of December 31, 2016, the Company’s farms and facilities were leased to 40 different, unrelated tenants that are either independent or corporate farming operations. The Company focuses to own primarily single-tenant, agricultural real property.

Drive Shack Company Profile

Drive Shack Inc., formerly Newcastle Investment Corp., is a leisure company. The Company is an owner and operator of golf-related leisure and entertainment businesses. The Company’s portfolio consists of Drive Shack, which is engaged in developing nationwide network of golf entertainment venues; American Golf Corporation, which is a golf course company, and real estate-related assets. American Golf Corporation operates approximately 90 private, resort and public golf courses throughout the United States. It has a range of public and private golf courses in California, New York, and Georgia. It operates multiple facilities that provide golf, tennis, swimming and spa facilities, among others. Its online Pro Shop offers a range of golf gifts, such as personalized golf balls, golf luggage and accessories. Its public golf courses equipped with practice areas, golf shops, driving ranges, and food and beverage options.

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