CareTrust REIT (NASDAQ: CTRE) and HCP (NYSE:HCP) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, profitability, valuation, dividends, analyst recommendations and risk.

Dividends

HCP pays an annual dividend of $1.48 per share and has a dividend yield of 5.1%. CareTrust REIT does not pay a dividend. HCP pays out 102.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

This is a breakdown of current recommendations for CareTrust REIT and HCP, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CareTrust REIT 0 4 3 0 2.43
HCP 1 14 2 0 2.06

CareTrust REIT presently has a consensus target price of $17.67, suggesting a potential downside of 6.38%. HCP has a consensus target price of $32.69, suggesting a potential upside of 11.96%. Given HCP’s higher probable upside, analysts clearly believe HCP is more favorable than CareTrust REIT.

Insider & Institutional Ownership

81.7% of CareTrust REIT shares are owned by institutional investors. Comparatively, 88.9% of HCP shares are owned by institutional investors. 1.6% of CareTrust REIT shares are owned by insiders. Comparatively, 0.2% of HCP shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

CareTrust REIT has a beta of 0.88, indicating that its stock price is 12% less volatile than the S&P 500. Comparatively, HCP has a beta of 0.37, indicating that its stock price is 63% less volatile than the S&P 500.

Profitability

This table compares CareTrust REIT and HCP’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CareTrust REIT 24.02% 5.76% 3.03%
HCP 32.16% 9.96% 4.19%

Valuation and Earnings

This table compares CareTrust REIT and HCP’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CareTrust REIT N/A N/A N/A $0.45 41.93
HCP $2.02 billion 6.78 $1.17 billion $1.45 20.14

HCP has higher revenue and earnings than CareTrust REIT. HCP is trading at a lower price-to-earnings ratio than CareTrust REIT, indicating that it is currently the more affordable of the two stocks.

Summary

HCP beats CareTrust REIT on 8 of the 14 factors compared between the two stocks.

CareTrust REIT Company Profile

CareTrust REIT, Inc. is a self-administered, self-managed real estate investment trust. The Company is engaged in the ownership, acquisition and leasing of healthcare-related properties. It makes investments in healthcare-related real estate assets. As of December 31, 2016, its real estate portfolio included 154 skilled nursing facilities (SNFs), SNF Campuses, assisted living facilities and independent living facilities. As of December 31, 2016, the 93 facilities leased to The Ensign Group, Inc. had a total of 9,916 beds and units and are located in Arizona, California, Colorado, Idaho, Iowa, Nebraska, Nevada, Texas, Utah and Washington; the 16 facilities leased to affiliates of Pristine Senior Living, LLC had a total of 1,488 beds and units; and the 42 remaining leased properties had a total of 3,515 beds and units and are located in California, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Maryland, Michigan, Minnesota, North Carolina, Texas, Virginia, Washington and Wisconsin.

HCP Company Profile

HCP, Inc. is a self-administered real estate investment trust. The Company invests in real estate serving the healthcare industry in the United States. The Company’s segments include senior housing triple-net (SH NNN), senior housing operating portfolio (SHOP), life science and medical office. Its senior housing facilities include independent living facilities, assisted living facilities, memory care facilities, care homes, and continuing care retirement communities. Its Life science properties contain laboratory and office space for biotechnology, medical device and pharmaceutical companies, scientific research institutions, government agencies and other organizations. Its Medical office buildings contain physicians’ offices and examination rooms, and may include pharmacies, hospital ancillary service space and outpatient services. As of December 31, 2016, it had interests in and managed 15 hospitals, 61 care homes in the United Kingdom and five post-acute/skilled nursing facilities.

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