Critical Survey: Highlands REIT (OTCMKTS:HHDS) and Granite Point Mortgage Trust (NYSE:GPMT)

Granite Point Mortgage Trust (NYSE:GPMT) and Highlands REIT (OTCMKTS:HHDS) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.

Insider & Institutional Ownership

51.6% of Granite Point Mortgage Trust shares are owned by institutional investors. Comparatively, 0.0% of Highlands REIT shares are owned by institutional investors. 2.3% of Granite Point Mortgage Trust shares are owned by company insiders. Comparatively, 3.7% of Highlands REIT shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Granite Point Mortgage Trust and Highlands REIT”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Granite Point Mortgage Trust	$39.86 million	3.47	-$207.05 million	($4.39)	-0.65
Highlands REIT	$30.98 million	1.21	-$10.30 million	$0.01	5.20

Highlands REIT has lower revenue, but higher earnings than Granite Point Mortgage Trust. Granite Point Mortgage Trust is trading at a lower price-to-earnings ratio than Highlands REIT, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Granite Point Mortgage Trust has a beta of 1.89, suggesting that its stock price is 89% more volatile than the S&P 500. Comparatively, Highlands REIT has a beta of 11.41, suggesting that its stock price is 1,041% more volatile than the S&P 500.

Profitability

This table compares Granite Point Mortgage Trust and Highlands REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Granite Point Mortgage Trust	-111.59%	-14.08%	-4.02%
Highlands REIT	-11.68%	-1.98%	-1.19%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Granite Point Mortgage Trust and Highlands REIT, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Granite Point Mortgage Trust	0	2	1	0	2.33
Highlands REIT	0	0	0	0	0.00

Granite Point Mortgage Trust currently has a consensus target price of $3.38, suggesting a potential upside of 19.05%. Given Granite Point Mortgage Trust’s stronger consensus rating and higher possible upside, analysts clearly believe Granite Point Mortgage Trust is more favorable than Highlands REIT.

Summary

Highlands REIT beats Granite Point Mortgage Trust on 8 of the 14 factors compared between the two stocks.

About Granite Point Mortgage Trust

Granite Point Mortgage Trust Inc., a real estate investment trust, originates, invests in, and manages senior floating-rate commercial mortgage loans, and other debt and debt-like commercial real estate investments in the United States. The company provides intermediate-term bridge or transitional financing for various purposes, including acquisitions, recapitalizations, and refinancing, as well as a range of business plans, including lease-up, renovation, repositioning, and repurposing of the commercial property. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was founded in 2015 and is headquartered in New York, New York.

About Highlands REIT

We are a self-advised and self-administered real estate investment trust (REIT) created to own and manage substantially all of the non-core investment properties previously owned and managed by our former parent, InvenTrust Properties Corp., a Maryland corporation (InvenTrust). On April 28, 2016, we were spun-off from InvenTrust through a pro rata distribution (the Distribution) by InvenTrust of 100% of the outstanding shares of our common stock to holders of InvenTrust's common stock. Prior to or concurrent with the separation, we and InvenTrust engaged in certain reorganization transactions that were designed to consolidate substantially all of InvenTrust's remaining non-core investment properties in Highlands.