Critical Comparison: Highlands REIT (OTCMKTS:HHDS) & Granite Point Mortgage Trust (NYSE:GPMT)

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

Profitability

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

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

Risk & Volatility

Highlands REIT has a beta of 11.56, suggesting that its share price is 1,056% more volatile than the S&P 500. Comparatively, Granite Point Mortgage Trust has a beta of 1.89, suggesting that its share price is 89% more volatile than the S&P 500.

Analyst Recommendations

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

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

Granite Point Mortgage Trust has a consensus price target of $3.38, indicating a potential upside of 18.63%. Given Granite Point Mortgage Trust’s stronger consensus rating and higher probable upside, analysts plainly believe Granite Point Mortgage Trust is more favorable than Highlands REIT.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Highlands REIT	$30.98 million	1.75	-$10.30 million	$0.01	7.50
Granite Point Mortgage Trust	$39.86 million	3.49	-$207.05 million	($4.39)	-0.65

Highlands REIT has higher earnings, but lower revenue 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.

Insider & Institutional Ownership

0.0% of Highlands REIT shares are held by institutional investors. Comparatively, 51.6% of Granite Point Mortgage Trust shares are held by institutional investors. 3.7% of Highlands REIT shares are held by insiders. Comparatively, 2.3% of Granite Point Mortgage Trust shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

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

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.

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.