Analyzing Highwoods Properties (NYSE:HIW) & Gladstone Commercial (NASDAQ:GOOD)

Gladstone Commercial (NASDAQ:GOOD) and Highwoods Properties (NYSE:HIW) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, dividends and valuation.

Insider and Institutional Ownership

45.5% of Gladstone Commercial shares are owned by institutional investors. Comparatively, 96.3% of Highwoods Properties shares are owned by institutional investors. 1.4% of Gladstone Commercial shares are owned by company insiders. Comparatively, 1.9% of Highwoods Properties shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Gladstone Commercial pays an annual dividend of $1.20 per share and has a dividend yield of 10.7%. Highwoods Properties pays an annual dividend of $2.00 per share and has a dividend yield of 6.9%. Gladstone Commercial pays out 666.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Highwoods Properties pays out 170.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk and Volatility

Gladstone Commercial has a beta of 1.11, suggesting that its share price is 11% more volatile than the S&P 500. Comparatively, Highwoods Properties has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Gladstone Commercial and Highwoods Properties, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gladstone Commercial	1	1	0	0	1.50
Highwoods Properties	1	4	2	0	2.14

Gladstone Commercial currently has a consensus price target of $13.00, suggesting a potential upside of 16.07%. Highwoods Properties has a consensus price target of $31.00, suggesting a potential upside of 6.46%. Given Gladstone Commercial’s higher possible upside, research analysts plainly believe Gladstone Commercial is more favorable than Highwoods Properties.

Profitability

This table compares Gladstone Commercial and Highwoods Properties’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gladstone Commercial	18.67%	16.37%	2.52%
Highwoods Properties	15.98%	5.48%	2.13%

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gladstone Commercial	$155.25 million	3.49	$24.00 million	$0.18	62.22
Highwoods Properties	$808.28 million	3.96	$102.25 million	$1.17	24.89

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

Summary

Highwoods Properties beats Gladstone Commercial on 10 of the 16 factors compared between the two stocks.

About Gladstone Commercial

Gladstone Commercial Corporation is a real estate investment trust focused on acquiring, owning, and operating net leased industrial and office properties across the United States. Including payments through January 2024, Gladstone Commercial has paid 229 consecutive monthly cash distributions on its common stock. Prior to paying distributions on a monthly basis, Gladstone Commercial paid five consecutive quarterly cash distributions. Gladstone Commercial has never skipped or deferred a distribution since its inception in 2003.

About Highwoods Properties

Highwoods Properties, Inc., headquartered in Raleigh, is a publicly-traded (NYSE:HIW), fully-integrated office real estate investment trust (REIT) that owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond and Tampa. Highwoods is in the work-placemaking business. We believe that by creating environments and experiences where the best and brightest can achieve together what they cannot apart, we can deliver greater value to our customers, their teammates and, in turn, our stakeholders.