Anworth Mortgage Asset Corporation (NYSE: ANH) and Gladstone Land Corporation (NASDAQ:LAND) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, earnings, institutional ownership and risk.

Profitability

This table compares Anworth Mortgage Asset Corporation and Gladstone Land Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Anworth Mortgage Asset Corporation 44.13% 8.83% 0.96%
Gladstone Land Corporation 2.58% 0.57% 0.15%

Institutional and Insider Ownership

56.2% of Anworth Mortgage Asset Corporation shares are held by institutional investors. Comparatively, 24.7% of Gladstone Land Corporation shares are held by institutional investors. 1.9% of Anworth Mortgage Asset Corporation shares are held by insiders. Comparatively, 21.9% of Gladstone Land Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Anworth Mortgage Asset Corporation and Gladstone Land Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Anworth Mortgage Asset Corporation $83.05 million 7.12 $61.46 million $0.63 9.62
Gladstone Land Corporation $21.14 million 7.27 $15.48 million $0.05 255.85

Anworth Mortgage Asset Corporation has higher revenue and earnings than Gladstone Land Corporation. Anworth Mortgage Asset Corporation 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.

Risk and Volatility

Anworth Mortgage Asset Corporation has a beta of 0.27, suggesting that its stock price is 73% less volatile than the S&P 500. Comparatively, Gladstone Land Corporation has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.

Dividends

Anworth Mortgage Asset Corporation pays an annual dividend of $0.60 per share and has a dividend yield of 9.9%. Gladstone Land Corporation pays an annual dividend of $0.53 per share and has a dividend yield of 4.1%. Anworth Mortgage Asset Corporation pays out 95.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. 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. Gladstone Land Corporation has raised its dividend for 2 consecutive years. Anworth Mortgage Asset Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current ratings and price targets for Anworth Mortgage Asset Corporation and Gladstone Land Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Anworth Mortgage Asset Corporation 0 1 0 0 2.00
Gladstone Land Corporation 0 0 2 0 3.00

Anworth Mortgage Asset Corporation presently has a consensus target price of $6.00, indicating a potential downside of 0.99%. Gladstone Land Corporation has a consensus target price of $14.25, indicating a potential upside of 11.42%. Given Gladstone Land Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Gladstone Land Corporation is more favorable than Anworth Mortgage Asset Corporation.

Summary

Anworth Mortgage Asset Corporation beats Gladstone Land Corporation on 9 of the 17 factors compared between the two stocks.

Anworth Mortgage Asset Corporation Company Profile

Anworth Mortgage Asset Corporation is a real estate investment trust (REIT). The Company’s investment objective is to provide risk-adjusted total returns to its stockholders over the long-term primarily through dividends and secondarily through capital appreciation. Its strategy is to invest in residential mortgage-backed securities (MBS) (both Agency MBS and Non-Agency MBS), residential mortgage loans and residential rental properties. Its principal business objective is to generate net income for distribution to its stockholders primarily based upon the spread between the interest income on its mortgage assets and its borrowing costs to finance its acquisition of those assets. The Company finances residential mortgage loans through asset-backed securities, which are issued by the consolidated securitization trusts. The Company is engaged in investing in, financing and managing a portfolio of residential mortgage-backed securities and residential mortgage loans.

Gladstone Land Corporation 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.

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