Head-To-Head Contrast: DiamondRock Hospitality (NYSE:DRH) vs. Farmland Partners (NYSE:FPI)

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

Analyst Ratings

This is a breakdown of current ratings for Farmland Partners and DiamondRock Hospitality, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Farmland Partners	0	3	0	0	2.00
DiamondRock Hospitality	0	6	4	0	2.40

DiamondRock Hospitality has a consensus price target of $10.14, suggesting a potential upside of 7.98%. Given DiamondRock Hospitality’s stronger consensus rating and higher possible upside, analysts plainly believe DiamondRock Hospitality is more favorable than Farmland Partners.

Risk & Volatility

Farmland Partners has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500. Comparatively, DiamondRock Hospitality has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Farmland Partners	60.46%	6.67%	4.14%
DiamondRock Hospitality	5.69%	4.04%	2.05%

Earnings & Valuation

This table compares Farmland Partners and DiamondRock Hospitality”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Farmland Partners	$52.18 million	9.28	$31.55 million	$0.60	18.49
DiamondRock Hospitality	$1.12 billion	1.72	$48.05 million	$0.44	21.34

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

Dividends

Farmland Partners pays an annual dividend of $0.24 per share and has a dividend yield of 2.2%. DiamondRock Hospitality pays an annual dividend of $0.36 per share and has a dividend yield of 3.8%. Farmland Partners pays out 40.0% of its earnings in the form of a dividend. DiamondRock Hospitality pays out 81.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. DiamondRock Hospitality has increased its dividend for 1 consecutive years. DiamondRock Hospitality is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

58.0% of Farmland Partners shares are owned by institutional investors. 7.9% of Farmland Partners shares are owned by company insiders. Comparatively, 0.9% of DiamondRock Hospitality shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

DiamondRock Hospitality beats Farmland Partners on 9 of the 17 factors compared between the two stocks.

About Farmland Partners

Farmland Partners Inc. is an internally managed real estate company that owns and seeks to acquire high-quality North American farmland and makes loans to farmers secured by farm real estate. As of December 31, 2023, the Company owns and/or manages approximately 171,100 acres in 16 states, including Arkansas, California, Colorado, Florida, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina and Texas. In addition, the Company owns land and buildings for four agriculture equipment dealerships in Ohio leased to Ag Pro under the John Deere brand. The Company has approximately 26 crop types and over 100 tenants. The Company elected to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with the taxable year ended December 31, 2014.

About DiamondRock Hospitality

DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of a leading portfolio of geographically diversified hotels concentrated in leisure destinations and top gateway markets. The Company currently owns 36 premium quality hotels with over 9,700 rooms. The Company has strategically positioned its portfolio to be operated both under leading global brand families as well as independent boutique hotels in the lifestyle segment.