Head-To-Head Survey: HFF (HF) & Gladstone Commercial (GOOD)

HFF (NYSE: HF) and Gladstone Commercial (NASDAQ:GOOD) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, dividends, institutional ownership, earnings and profitability.

Institutional and Insider Ownership

93.3% of HFF shares are held by institutional investors. Comparatively, 53.7% of Gladstone Commercial shares are held by institutional investors. 5.7% of HFF shares are held by company insiders. Comparatively, 2.0% of Gladstone Commercial shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

HFF has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500. Comparatively, Gladstone Commercial has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500.

Dividends

Gladstone Commercial pays an annual dividend of $1.50 per share and has a dividend yield of 8.8%. HFF does not pay a dividend. Gladstone Commercial pays out 98.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

This is a summary of current ratings and price targets for HFF and Gladstone Commercial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HFF 0 3 0 0 2.00
Gladstone Commercial 0 3 2 0 2.40

HFF currently has a consensus price target of $28.00, indicating a potential downside of 43.37%. Gladstone Commercial has a consensus price target of $21.33, indicating a potential upside of 25.71%. Given Gladstone Commercial’s stronger consensus rating and higher probable upside, analysts clearly believe Gladstone Commercial is more favorable than HFF.

Earnings & Valuation

This table compares HFF and Gladstone Commercial’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HFF $609.48 million 3.14 $94.96 million $2.47 20.02
Gladstone Commercial $94.80 million 5.09 $5.93 million $1.52 11.16

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

Profitability

This table compares HFF and Gladstone Commercial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HFF 15.58% 41.13% 8.87%
Gladstone Commercial 6.26% 2.36% 0.68%

Summary

HFF beats Gladstone Commercial on 11 of the 16 factors compared between the two stocks.

About HFF

HFF, Inc. is a holding company. The Company holds the partnership interests in Holliday Fenoglio Fowler, L.P. and HFF Securities L.P. (together, the Operating Partnerships), held through the subsidiary HFF Partnership Holdings, LLC, and all of the outstanding shares of Holliday GP Corp. (Holliday GP). The Company operates through the commercial real estate financial intermediary segment. It offers debt placement, investment sales, distressed debt and real estate owned advisory services, equity placement, investment banking and advisory services, loan sales and commercial loan servicing. Its fully-integrated national capital markets platform, coupled with its knowledge of the commercial real estate markets provides an range of capital markets services, including Debt placement; Investment sales; Distressed debt and real estate owned advisory services; Equity placement; Investment banking and advisory services; Loan sales; and Commercial loan servicing.

About Gladstone Commercial

Gladstone Commercial Corporation is a real estate investment trust. The Company focuses on acquiring, owning and managing primarily office and industrial properties. The Company also makes long-term industrial and commercial mortgage loans. As of February 15, 2017, the Company owned 95 properties totaling 10.9 million square feet in 24 states. As of December 31, 2016, the Company’s properties were located in various states of the United States, such as Ohio, Pennsylvania, North Carolina, Georgia, South Carolina, Michigan, Minnesota, Colorado and New Jersey. The Company’s properties have tenants from various industries, such as telecommunications; healthcare; automobile; electronics; information technology; chemicals, plastics and rubber; containers, packaging and glass; personal and non-durable consumer products; machinery; banking; childcare; buildings and real estate; beverage, food and tobacco; printing and publishing; education; home and office furnishings, and oil and gas.

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