Head-To-Head Contrast: Farmland Partners (NYSE:FPI) & DiamondRock Hospitality (NYSE:DRH)

DiamondRock Hospitality (NYSE:DRH) and Farmland Partners (NYSE:FPI) 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, valuation, institutional ownership, earnings, dividends and risk.

Earnings & Valuation

This table compares DiamondRock Hospitality and Farmland Partners”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DiamondRock Hospitality	$1.12 billion	1.75	$48.05 million	$0.44	21.80
Farmland Partners	$52.18 million	9.20	$31.55 million	$0.60	18.33

DiamondRock Hospitality has higher revenue and earnings than Farmland Partners. Farmland Partners is trading at a lower price-to-earnings ratio than DiamondRock Hospitality, indicating that it is currently the more affordable of the two stocks.

Dividends

DiamondRock Hospitality pays an annual dividend of $0.36 per share and has a dividend yield of 3.8%. Farmland Partners pays an annual dividend of $0.24 per share and has a dividend yield of 2.2%. DiamondRock Hospitality pays out 81.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Farmland Partners pays out 40.0% of its earnings in the form of a dividend. DiamondRock Hospitality has raised its dividend for 1 consecutive years. DiamondRock Hospitality is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

58.0% of Farmland Partners shares are held by institutional investors. 0.9% of DiamondRock Hospitality shares are held by company insiders. Comparatively, 8.3% of Farmland Partners shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares DiamondRock Hospitality and Farmland Partners’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
DiamondRock Hospitality	5.69%	4.04%	2.05%
Farmland Partners	60.46%	6.67%	4.14%

Risk & Volatility

DiamondRock Hospitality has a beta of 0.98, suggesting that its share price is 2% less volatile than the S&P 500. Comparatively, Farmland Partners has a beta of 0.75, suggesting that its share price is 25% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for DiamondRock Hospitality and Farmland Partners, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DiamondRock Hospitality	0	6	4	0	2.40
Farmland Partners	0	3	0	0	2.00

DiamondRock Hospitality currently has a consensus price target of $10.14, indicating a potential upside of 5.72%. Given DiamondRock Hospitality’s stronger consensus rating and higher possible upside, research analysts clearly believe DiamondRock Hospitality is more favorable than Farmland Partners.

Summary

DiamondRock Hospitality beats Farmland Partners on 9 of the 17 factors compared between the two stocks.

About DiamondRock Hospitality

DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of a leading portfolio of geographically diversified hotels concentrated in leisure destinations and top gateway markets. The Company currently owns 36 premium quality hotels with over 9,700 rooms. The Company has strategically positioned its portfolio to be operated both under leading global brand families as well as independent boutique hotels in the lifestyle segment.

About Farmland Partners

Farmland Partners Inc. is an internally managed real estate company that owns and seeks to acquire high-quality North American farmland and makes loans to farmers secured by farm real estate. As of December 31, 2023, the Company owns and/or manages approximately 171,100 acres in 16 states, including Arkansas, California, Colorado, Florida, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina and Texas. In addition, the Company owns land and buildings for four agriculture equipment dealerships in Ohio leased to Ag Pro under the John Deere brand. The Company has approximately 26 crop types and over 100 tenants. The Company elected to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with the taxable year ended December 31, 2014.