Farmland Partners (NYSE: FPI) and Jernigan Capital (NYSE:JCAP) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, dividends, analyst recommendations, earnings and profitability.

Profitability

This table compares Farmland Partners and Jernigan Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Farmland Partners 12.46% 1.66% 0.60%
Jernigan Capital 185.96% 9.37% 7.91%

Dividends

Farmland Partners pays an annual dividend of $0.51 per share and has a dividend yield of 5.8%. Jernigan Capital pays an annual dividend of $1.40 per share and has a dividend yield of 7.4%. Farmland Partners pays out 425.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Jernigan Capital pays out 69.7% of its earnings in the form of a dividend. Jernigan Capital has increased its dividend for 2 consecutive years. Jernigan Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

39.8% of Farmland Partners shares are owned by institutional investors. Comparatively, 60.6% of Jernigan Capital shares are owned by institutional investors. 2.8% of Farmland Partners shares are owned by insiders. Comparatively, 3.2% of Jernigan Capital shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility and Risk

Farmland Partners has a beta of 0.18, suggesting that its stock price is 82% less volatile than the S&P 500. Comparatively, Jernigan Capital has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500.

Earnings and Valuation

This table compares Farmland Partners and Jernigan Capital’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Farmland Partners $38.89 million 7.41 $24.04 million $0.12 73.84
Jernigan Capital $7.80 million 34.74 $28.62 million $2.01 9.47

Jernigan Capital has higher revenue, but lower earnings than Farmland Partners. Jernigan Capital is trading at a lower price-to-earnings ratio than Farmland Partners, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Farmland Partners and Jernigan Capital, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Farmland Partners 0 3 1 0 2.25
Jernigan Capital 0 1 2 0 2.67

Farmland Partners currently has a consensus price target of $10.13, suggesting a potential upside of 14.28%. Jernigan Capital has a consensus price target of $25.33, suggesting a potential upside of 33.12%. Given Jernigan Capital’s stronger consensus rating and higher possible upside, analysts plainly believe Jernigan Capital is more favorable than Farmland Partners.

Summary

Jernigan Capital beats Farmland Partners on 15 of the 17 factors compared between the two stocks.

About Farmland Partners

Farmland Partners, Inc. is an internally managed real estate company. The Company owns and seeks to acquire farmland located in agricultural markets throughout North America. The Company is the sole member of the general partner of Farmland Partners Operating Partnership, LP (the Operating Partnership). All of the Company’s assets are held by, and its operations are primarily conducted through, the Operating Partnership and the subsidiaries of the Operating Partnership. The Company’s principal investment focus is on farmland located in agricultural markets throughout North America, however, it may seek to acquire farmland outside of North America. It also may acquire properties related to farming, such as grain storage facilities, grain elevators, feedlots, cold storage facilities, processing plants and distribution centers, as well as livestock farms or ranches. As of December 31, 2016, the Company owned approximately 115,489 acres, as well as eight grain storage facilities.

About Jernigan Capital

Jernigan Capital, Inc. is a commercial real estate finance company. The Company provides capital to private developers, owners and operators of self-storage facilities. It intends to generate long-term returns on development property investments through a fixed rate of interest on its invested capital together with an interest in the positive cash flows of the self-storage development from operations, sales and/or refinancings. It generates cash flows from construction loans and operating property loans in the form of a fixed interest rate and origination fees. It originates various loans, such as bridge loans and credit lines. It has development property investments in Orlando, Atlanta, Tampa, Chicago and Miami. Its operating property loans are located in New Orleans, Newark, Nashville, Sacramento and Chicago. The Company conducts its investment activities through Jernigan Capital Operating Company, LLC. The Company is externally managed and advised by JCap Advisors, LLC.

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