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

Profitability

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

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

Dividends

Jernigan Capital pays an annual dividend of $1.40 per share and has a dividend yield of 6.9%. Farmland Partners pays an annual dividend of $0.51 per share and has a dividend yield of 5.6%. Jernigan Capital pays out 69.7% of its earnings in the form of a dividend. 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. Farmland Partners has raised its dividend for 2 consecutive years. Jernigan Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Jernigan Capital has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500. Comparatively, Farmland Partners has a beta of 0.18, suggesting that its stock price is 82% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Jernigan Capital and Farmland Partners, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Jernigan Capital 0 1 2 0 2.67
Farmland Partners 0 4 1 0 2.20

Jernigan Capital presently has a consensus price target of $24.33, indicating a potential upside of 19.75%. Farmland Partners has a consensus price target of $9.94, indicating a potential upside of 9.69%. Given Jernigan Capital’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Jernigan Capital is more favorable than Farmland Partners.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Jernigan Capital $7.80 million 36.56 $28.21 million $2.01 10.11
Farmland Partners $38.89 million 7.58 $24.04 million $0.12 75.51

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.

Institutional & Insider Ownership

60.6% of Jernigan Capital shares are held by institutional investors. Comparatively, 39.7% of Farmland Partners shares are held by institutional investors. 3.2% of Jernigan Capital shares are held by company insiders. Comparatively, 2.8% of Farmland Partners shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Jernigan Capital beats Farmland Partners on 14 of the 17 factors compared between the two stocks.

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.

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.

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