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

Dividends

Drive Shack pays an annual dividend of $0.24 per share and has a dividend yield of 8.8%. Gladstone Land Corporation pays an annual dividend of $0.53 per share and has a dividend yield of 3.9%. Drive Shack pays out -68.6% of its earnings in the form of a dividend. Gladstone Land Corporation 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

41.8% of Drive Shack shares are held by institutional investors. Comparatively, 24.7% of Gladstone Land Corporation shares are held by institutional investors. 7.2% of Drive Shack shares are held by insiders. Comparatively, 21.9% of Gladstone Land Corporation shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Drive Shack and Gladstone Land Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Drive Shack $292.74 million 0.62 $8.22 million ($0.35) -7.77
Gladstone Land Corporation $21.14 million 7.69 $15.48 million $0.05 270.85

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

Analyst Ratings

This is a breakdown of recent recommendations for Drive Shack and Gladstone Land Corporation, as reported by MarketBeat.

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

Drive Shack currently has a consensus price target of $3.75, suggesting a potential upside of 37.87%. Gladstone Land Corporation has a consensus price target of $14.25, suggesting a potential upside of 5.24%. Given Drive Shack’s higher possible upside, equities analysts clearly believe Drive Shack is more favorable than Gladstone Land Corporation.

Risk and Volatility

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

Profitability

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

Net Margins Return on Equity Return on Assets
Drive Shack -7.05% 25.92% 3.08%
Gladstone Land Corporation 2.58% 0.57% 0.15%

Summary

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

About Drive Shack

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.

About Gladstone Land Corporation

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.

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