Preferred Apartment Communities (NYSE:APTS) and Gladstone Land (NASDAQ:LAND) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, dividends, profitability, valuation and analyst recommendations.
Volatility and Risk
Preferred Apartment Communities has a beta of 0.51, indicating that its stock price is 49% less volatile than the S&P 500. Comparatively, Gladstone Land has a beta of 0.99, indicating that its stock price is 1% less volatile than the S&P 500.
59.8% of Preferred Apartment Communities shares are held by institutional investors. Comparatively, 31.1% of Gladstone Land shares are held by institutional investors. 1.6% of Preferred Apartment Communities shares are held by insiders. Comparatively, 16.1% of Gladstone Land shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
This is a summary of recent recommendations for Preferred Apartment Communities and Gladstone Land, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Preferred Apartment Communities||0||1||2||0||2.67|
Preferred Apartment Communities presently has a consensus target price of $18.67, suggesting a potential upside of 22.40%. Gladstone Land has a consensus target price of $15.00, suggesting a potential upside of 19.81%. Given Preferred Apartment Communities’ stronger consensus rating and higher probable upside, equities research analysts clearly believe Preferred Apartment Communities is more favorable than Gladstone Land.
This table compares Preferred Apartment Communities and Gladstone Land’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Preferred Apartment Communities||10.94%||2.94%||1.10%|
Preferred Apartment Communities pays an annual dividend of $1.04 per share and has a dividend yield of 6.8%. Gladstone Land pays an annual dividend of $0.53 per share and has a dividend yield of 4.2%. Preferred Apartment Communities pays out 73.8% of its earnings in the form of a dividend. Gladstone Land pays out 103.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Preferred Apartment Communities has increased its dividend for 3 consecutive years and Gladstone Land has increased its dividend for 3 consecutive years. Preferred Apartment Communities is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings & Valuation
This table compares Preferred Apartment Communities and Gladstone Land’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Preferred Apartment Communities||$397.27 million||1.65||$43.47 million||$1.41||10.82|
|Gladstone Land||$36.69 million||6.16||$2.63 million||$0.51||24.55|
Preferred Apartment Communities has higher revenue and earnings than Gladstone Land. Preferred Apartment Communities is trading at a lower price-to-earnings ratio than Gladstone Land, indicating that it is currently the more affordable of the two stocks.
Preferred Apartment Communities beats Gladstone Land on 12 of the 16 factors compared between the two stocks.
About Preferred Apartment Communities
Preferred Apartment Communities, Inc. (NYSE: APTS), or the Company, is a Maryland corporation formed primarily to acquire and operate multifamily properties in select targeted markets throughout the United States. As part of our business strategy, we may enter into forward purchase contracts or purchase options for to-be-built multifamily communities and we may make real estate related loans, provide deposit arrangements or provide performance assurances, as may be necessary or appropriate, in connection with the development of multifamily communities and other properties. As a secondary strategy, we may acquire or originate senior mortgage loans, subordinate loans or real estate loans secured by interests in multifamily properties, membership or partnership interests in multifamily properties and other multifamily related assets and invest a lesser portion of our assets in other real estate related investments, including other income-producing property types, senior mortgage loans, subordinate loans or real estate loans secured by interests in other income-producing property types or membership or partnership interests in other income-producing property types as determined by Preferred Apartment Advisors, LLC, or our Manager, as appropriate for us. At September 30, 2018, the Company was the approximate 97.4% owner of Preferred Apartment Communities Operating Partnership, L.P., or the Operating Partnership. We elected to be taxed as a real estate investment trust under the Internal Revenue Code of 1986, as amended, commencing with our tax year ended December 31, 2011.
About Gladstone Land
Gladstone Land is a publicly-traded real estate investment trust that invests in farmland and farm-related properties located in major agricultural markets in the U.S., which it leases to unrelated third-party farmers. The Company reports the current fair value of its farmland on a quarterly basis; as of September 30, 2018, the estimated net asset value of the Company was $13.79 per share. Gladstone Land currently owns 83 farms, comprised of 68,777 acres in 9 different states across the U.S., valued at approximately $602 million. Its acreage is predominantly concentrated in locations where its tenants are able to grow fresh produce annual row crops (e.g., berries and vegetables), which are generally planted and harvested annually, as well as permanent crops (e.g., almonds, blueberries, and pistachios), which are generally planted every 10 to 20-plus years. 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 69 consecutive monthly cash distributions on its common stock since its initial public offering in January 2013. The current per-share distribution rate on its common stock is $0.0444 per month, or $0.5328 per year.
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