Critical Contrast: Gladstone Land (NASDAQ:LAND) and Whitestone REIT (NYSE:WSR)

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

Analyst Recommendations

This is a summary of recent ratings for Gladstone Land and Whitestone REIT, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gladstone Land	0	3	1	0	2.25
Whitestone REIT	0	1	6	1	3.00

Gladstone Land currently has a consensus price target of $10.00, indicating a potential downside of 3.29%. Whitestone REIT has a consensus price target of $16.80, indicating a potential upside of 1.47%. Given Whitestone REIT’s stronger consensus rating and higher probable upside, analysts plainly believe Whitestone REIT is more favorable than Gladstone Land.

Dividends

Gladstone Land pays an annual dividend of $0.56 per share and has a dividend yield of 5.4%. Whitestone REIT pays an annual dividend of $0.57 per share and has a dividend yield of 3.4%. Gladstone Land pays out -466.7% of its earnings in the form of a dividend. Whitestone REIT pays out 60.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Gladstone Land has increased its dividend for 2 consecutive years and Whitestone REIT has increased its dividend for 5 consecutive years. Gladstone Land is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

53.6% of Gladstone Land shares are owned by institutional investors. Comparatively, 69.5% of Whitestone REIT shares are owned by institutional investors. 7.2% of Gladstone Land shares are owned by insiders. Comparatively, 3.2% of Whitestone REIT shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Gladstone Land and Whitestone REIT”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gladstone Land	$88.34 million	4.88	$13.53 million	($0.12)	-86.17
Whitestone REIT	$160.86 million	5.29	$49.93 million	$0.95	17.43

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

Risk & Volatility

Gladstone Land has a beta of 1.23, suggesting that its stock price is 23% more volatile than the S&P 500. Comparatively, Whitestone REIT has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500.

Profitability

This table compares Gladstone Land and Whitestone REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gladstone Land	15.31%	2.01%	1.08%
Whitestone REIT	31.04%	11.23%	4.34%

Summary

Whitestone REIT beats Gladstone Land on 14 of the 18 factors compared between the two stocks.

About Gladstone Land

Founded in 1997, Gladstone Land is a publicly traded real estate investment trust that acquires and owns farmland and farm-related properties located in major agricultural markets in the U.S. and leases its properties to unrelated third-party farmers. The Company, which reports the aggregate fair value of its farmland holdings on a quarterly basis, currently owns 169 farms, comprised of approximately 116,000 acres in 15 different states and over 45,000 acre-feet of banked water in California, valued at a total of approximately $1.6 billion. Gladstone Land’s farms are predominantly located in regions where its tenants are able to grow fresh produce annual row crops, such as berries and vegetables, which are generally planted and harvested annually. The Company also owns farms growing permanent crops, such as almonds, apples, cherries, figs, lemons, olives, pistachios, and other orchards, as well as blueberry groves and vineyards, which are generally planted every 20-plus years and harvested annually. Approximately 40% of the Company’s fresh produce acreage is either organic or in transition to become organic, and over 10% of its permanent crop acreage falls into this category. The Company may also acquire property related to farming, such as cooling facilities, processing buildings, packaging facilities, and distribution centers. Gladstone Land pays monthly distributions to its stockholders and has paid 129 consecutive monthly cash distributions on its common stock since its initial public offering in January 2013. The Company has increased its common distributions 32 times over the prior 35 quarters, and the current per-share distribution on its common stock is $0.0464 per month, or $0.5568 per year.

About Whitestone REIT

Whitestone REIT (NYSE: WSR) is a community-centered real estate investment trust (REIT) that acquires, owns, operates, and develops open-air, retail centers located in some of the fastest growing markets in the country: Phoenix, Austin, Dallas-Fort Worth, Houston and San Antonio. Our centers are convenience focused: merchandised with a mix of service-oriented tenants providing food (restaurants and grocers), self-care (health and fitness), services (financial and logistics), education and entertainment to the surrounding communities. The Company believes its strong community connections and deep tenant relationships are key to the success of its current centers and its acquisition strategy.