Comparing Global Net Lease (NYSE:GNL) and DiamondRock Hospitality (NYSE:DRH)

DiamondRock Hospitality (NYSE:DRH) and Global Net Lease (NYSE:GNL) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, dividends, risk, valuation, analyst recommendations and institutional ownership.

Profitability

This table compares DiamondRock Hospitality and Global Net Lease’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
DiamondRock Hospitality	6.30%	4.25%	2.18%
Global Net Lease	-21.37%	-7.04%	-2.24%

Dividends

DiamondRock Hospitality pays an annual dividend of $0.12 per share and has a dividend yield of 1.4%. Global Net Lease pays an annual dividend of $1.10 per share and has a dividend yield of 15.4%. DiamondRock Hospitality pays out 42.9% of its earnings in the form of a dividend. Global Net Lease pays out -117.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Global Net Lease is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of recent ratings and price targets for DiamondRock Hospitality and Global Net Lease, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DiamondRock Hospitality	0	3	1	0	2.25
Global Net Lease	0	2	3	1	2.83

DiamondRock Hospitality presently has a consensus target price of $10.25, suggesting a potential upside of 17.55%. Global Net Lease has a consensus target price of $9.50, suggesting a potential upside of 33.05%. Given Global Net Lease’s stronger consensus rating and higher possible upside, analysts clearly believe Global Net Lease is more favorable than DiamondRock Hospitality.

Insider & Institutional Ownership

61.2% of Global Net Lease shares are held by institutional investors. 1.4% of DiamondRock Hospitality shares are held by company insiders. Comparatively, 0.3% of Global Net Lease 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 and Risk

DiamondRock Hospitality has a beta of 1.6, indicating that its stock price is 60% more volatile than the S&P 500. Comparatively, Global Net Lease has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500.

Earnings and Valuation

This table compares DiamondRock Hospitality and Global Net Lease”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DiamondRock Hospitality	$1.07 billion	1.68	$86.34 million	$0.28	31.14
Global Net Lease	$812.62 million	2.03	-$211.91 million	($0.94)	-7.60

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

Summary

DiamondRock Hospitality beats Global Net Lease 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 Global Net Lease

Global Net Lease, Inc. (NYSE: GNL) is a publicly traded real estate investment trust listed on the NYSE. The firm focused on acquiring a diversified global portfolio of commercial properties, with an emphasis on sale-leaseback transactions involving single tenant, mission critical income producing net-leased assets across the United States, Western and Northern Europe.