Critical Survey: LTC Properties (NYSE:LTC) vs. Gladstone Land (NASDAQ:LAND)

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

Earnings and Valuation

This table compares Gladstone Land and LTC Properties”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gladstone Land	$88.57 million	4.90	$14.56 million	($0.26)	-46.12
LTC Properties	$207.46 million	8.33	$89.74 million	$2.33	16.39

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

Profitability

This table compares Gladstone Land and LTC Properties’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gladstone Land	16.45%	2.05%	1.07%
LTC Properties	48.77%	10.49%	5.44%

Volatility and Risk

Gladstone Land has a beta of 1.08, suggesting that its share price is 8% more volatile than the S&P 500. Comparatively, LTC Properties has a beta of 0.9, suggesting that its share price is 10% less volatile than the S&P 500.

Dividends

Gladstone Land pays an annual dividend of $0.56 per share and has a dividend yield of 4.7%. LTC Properties pays an annual dividend of $2.28 per share and has a dividend yield of 6.0%. Gladstone Land pays out -215.4% of its earnings in the form of a dividend. LTC Properties pays out 97.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a breakdown of recent ratings for Gladstone Land and LTC Properties, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gladstone Land	0	3	1	0	2.25
LTC Properties	0	2	1	0	2.33

Gladstone Land presently has a consensus target price of $15.50, indicating a potential upside of 29.27%. LTC Properties has a consensus target price of $37.00, indicating a potential downside of 3.14%. Given Gladstone Land’s higher possible upside, analysts clearly believe Gladstone Land is more favorable than LTC Properties.

Institutional and Insider Ownership

53.6% of Gladstone Land shares are held by institutional investors. Comparatively, 69.3% of LTC Properties shares are held by institutional investors. 7.2% of Gladstone Land shares are held by insiders. Comparatively, 2.0% of LTC Properties shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

LTC Properties beats Gladstone Land on 11 of the 15 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 LTC Properties

LTC is a real estate investment trust (REIT) investing in seniors housing and health care properties primarily through sale-leasebacks, mortgage financing, joint-ventures and structured finance solutions including preferred equity and mezzanine lending. LTC's investment portfolio includes 201 properties in 26 states with 29 operating partners. Based on its gross real estate investments, LTC's investment portfolio is comprised of approximately 50% seniors housing and 50% skilled nursing properties.