Global Net Lease (NYSE: GNL) and Armada Hoffler Properties (NYSE:AHH) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, analyst recommendations, valuation and profitability.

Analyst Ratings

This is a breakdown of recent recommendations for Global Net Lease and Armada Hoffler Properties, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Global Net Lease 0 1 0 0 2.00
Armada Hoffler Properties 0 2 4 0 2.67

Global Net Lease currently has a consensus target price of $24.45, indicating a potential upside of 14.15%. Armada Hoffler Properties has a consensus target price of $14.75, indicating a potential upside of 8.38%. Given Global Net Lease’s higher possible upside, equities analysts clearly believe Global Net Lease is more favorable than Armada Hoffler Properties.

Institutional & Insider Ownership

42.5% of Global Net Lease shares are held by institutional investors. Comparatively, 81.4% of Armada Hoffler Properties shares are held by institutional investors. 0.2% of Global Net Lease shares are held by company insiders. Comparatively, 20.9% of Armada Hoffler Properties shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

Global Net Lease has a beta of 0.69, meaning that its share price is 31% less volatile than the S&P 500. Comparatively, Armada Hoffler Properties has a beta of 0.54, meaning that its share price is 46% less volatile than the S&P 500.

Valuation and Earnings

This table compares Global Net Lease and Armada Hoffler Properties’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Global Net Lease $233.85 million 6.16 $180.89 million $0.61 35.11
Armada Hoffler Properties $315.03 million 2.71 $65.61 million $0.48 28.35

Global Net Lease has higher revenue, but lower earnings than Armada Hoffler Properties. Armada Hoffler Properties is trading at a lower price-to-earnings ratio than Global Net Lease, indicating that it is currently the more affordable of the two stocks.

Dividends

Global Net Lease pays an annual dividend of $2.13 per share and has a dividend yield of 9.9%. Armada Hoffler Properties pays an annual dividend of $0.76 per share and has a dividend yield of 5.6%. Global Net Lease pays out 349.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Armada Hoffler Properties pays out 158.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Global Net Lease has increased its dividend for 3 consecutive years. Global Net Lease is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Global Net Lease and Armada Hoffler Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Global Net Lease 16.04% 2.91% 1.35%
Armada Hoffler Properties 8.04% 7.02% 2.58%

Summary

Armada Hoffler Properties beats Global Net Lease on 9 of the 17 factors compared between the two stocks.

About Global Net Lease

Global Net Lease, Inc. is a real estate investment trust. The Company’s business consists of owning, managing, operating, leasing, acquiring, investing in and disposing of real estate assets. It owns and invests in commercial properties principally in the United States, the United Kingdom and continental Europe that are then leased to companies. It was formed to primarily acquire a portfolio of commercial properties, with an emphasis on sale-leaseback transactions involving single tenant net-leased commercial properties. As of December 31, 2016, it owned 310 properties consisting of 22 million rentable square feet. As of December 31, 2016, its owned 310 properties, including 241 properties located in the United States and Puerto Rico, 43 properties located in the United Kingdom and 26 properties located across continental Europe. It may also originate or acquire first mortgage loans secured by real estate. Its business is conducted through Global Net Lease Operating Partnership, L.P.

About Armada Hoffler Properties

Armada Hoffler Properties, Inc. is a real estate company. The Company is engaged in developing, building, owning and managing institutional-grade office, retail and multifamily properties in various markets throughout the Mid-Atlantic and Southeastern United States. In addition to the ownership of its operating property portfolio, the Company develops and builds properties for its own account and through joint ventures between the Company and unaffiliated partners. It also provides general contracting services to third parties. Its construction and development experience includes mid- and high-rise office buildings, retail strip malls and retail power centers, multifamily apartment communities, hotels and conference centers, single- and multi-tenant industrial, distribution and manufacturing facilities, educational, medical and special purpose facilities, government projects, parking garages and mixed-use town centers.

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