Why Gladstone Commercial Stock Sank by 6% Today

Gladstone Commercial (NASDAQ: GOOD) had a Tuesday to forget, at least as far as its stock was concerned. The real estate investment trust (REIT) published its third-quarter results the previous day after market close, and investors clearly weren't impressed by these. They traded out of the company's shares to leave them with a 6% loss in value.

A tale of two line items

Gladstone's revenue grew 3% year over year during the period to hit $40.8 million. Net income available to common stockholders, and according to generally accepted accounting practices (GAAP), very much went in the other direction. It fell by almost 33% to $983,000 ($0.02 per share).

This shook out into a mixed quarter for Gladstone, as analysts tracking the stock were collectively anticipating just under $39.8 million for revenue, but $0.10 per share for net income.

Funds from operations (FFO), widely considered to be a more accurate gauge of profitability for REITs, actually increased during the quarter. It came in at almost $16.3 million, for a 6% gain.

Operational increases

In the third frame, Gladstone's count of properties owned increased to 151 from the year-ago quarter's 143. Additionally, its square feet leased as a percentage of total properties also rose, hitting 99.1% from third-quarter 2024's 98.7%.

Given that, and the bumps in revenue and FFO, I think the market put too much of an emphasis on the bottom-line miss.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.