CareTrust REIT (NASDAQ: CTRE) and MedEquities Realty Trust (NYSE:MRT) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, profitability, dividends, valuation, analyst recommendations, institutional ownership and risk.
Earnings & Valuation
This table compares CareTrust REIT and MedEquities Realty Trust’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|CareTrust REIT||$118.79 million||12.52||$96.91 million||$0.45||43.53|
|MedEquities Realty Trust||$56.96 million||6.54||$46.67 million||$0.35||33.51|
CareTrust REIT has higher revenue and earnings than MedEquities Realty Trust. MedEquities Realty Trust is trading at a lower price-to-earnings ratio than CareTrust REIT, indicating that it is currently the more affordable of the two stocks.
This table compares CareTrust REIT and MedEquities Realty Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|MedEquities Realty Trust||32.68%||5.58%||3.52%|
This is a breakdown of current ratings and target prices for CareTrust REIT and MedEquities Realty Trust, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|MedEquities Realty Trust||1||1||6||0||2.63|
CareTrust REIT presently has a consensus price target of $18.33, suggesting a potential downside of 6.41%. MedEquities Realty Trust has a consensus price target of $13.00, suggesting a potential upside of 10.83%. Given MedEquities Realty Trust’s stronger consensus rating and higher possible upside, analysts clearly believe MedEquities Realty Trust is more favorable than CareTrust REIT.
Insider & Institutional Ownership
89.4% of CareTrust REIT shares are owned by institutional investors. Comparatively, 92.9% of MedEquities Realty Trust shares are owned by institutional investors. 1.6% of CareTrust REIT shares are owned by company insiders. Comparatively, 2.5% of MedEquities Realty Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
MedEquities Realty Trust pays an annual dividend of $0.84 per share and has a dividend yield of 7.2%. CareTrust REIT does not pay a dividend. MedEquities Realty Trust pays out 240.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
MedEquities Realty Trust beats CareTrust REIT on 8 of the 15 factors compared between the two stocks.
About CareTrust REIT
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.
About MedEquities Realty Trust
MedEquities Realty Trust, Inc. is a real estate investment trust (REIT). The Company invests in a diversified mix of healthcare properties and healthcare-related real estate debt investments. The Company invests primarily in real estate across the acute and post-acute spectrum of care. It focuses on investing in various types of healthcare properties, including acute care hospitals; skilled nursing facilities; short-stay surgical and specialty hospitals, which focus on orthopedic, heart and other dedicated surgeries and specialty procedures; dedicated specialty hospitals, such as inpatient rehabilitation facilities, long-term acute care hospitals and facilities providing psychiatric care; physician clinics; diagnostic facilities; outpatient surgery centers, and facilities that support these services, such as medical office buildings. As of September 30, 2016, the Company’s portfolio included 24 healthcare facilities and one healthcare-related debt investment.
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