Analyzing Welltower (HCN) and MedEquities Realty Trust (MRT)
Welltower (NYSE: HCN) and MedEquities Realty Trust (NYSE:MRT) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, risk, institutional ownership, earnings, profitability and analyst recommendations.
Insider and Institutional Ownership
85.9% of Welltower shares are held by institutional investors. Comparatively, 92.9% of MedEquities Realty Trust shares are held by institutional investors. 0.2% of Welltower shares are held by company insiders. Comparatively, 2.5% of MedEquities Realty Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Earnings & Valuation
This table compares Welltower and MedEquities Realty Trust’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Welltower||$4.19 billion||6.04||$2.05 billion||$3.21||21.38|
|MedEquities Realty Trust||$56.96 million||6.61||$46.67 million||$0.35||33.86|
Welltower has higher revenue and earnings than MedEquities Realty Trust. Welltower is trading at a lower price-to-earnings ratio than MedEquities Realty Trust, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current recommendations for Welltower and MedEquities Realty Trust, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|MedEquities Realty Trust||1||1||6||0||2.63|
Welltower currently has a consensus price target of $72.69, suggesting a potential upside of 5.92%. MedEquities Realty Trust has a consensus price target of $13.00, suggesting a potential upside of 9.70%. Given MedEquities Realty Trust’s stronger consensus rating and higher probable upside, analysts plainly believe MedEquities Realty Trust is more favorable than Welltower.
Welltower pays an annual dividend of $3.48 per share and has a dividend yield of 5.1%. MedEquities Realty Trust pays an annual dividend of $0.84 per share and has a dividend yield of 7.1%. Welltower pays out 108.4% 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 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 has increased its dividend for 7 consecutive years. MedEquities Realty Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares Welltower 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%|
MedEquities Realty Trust beats Welltower on 9 of the 15 factors compared between the two stocks.
Welltower Inc. invests with seniors housing operators, post-acute providers and health systems to fund real estate and infrastructure. The Company invests in seniors housing and healthcare real estate. It operates in three segments: triple-net, seniors housing operating and outpatient medical. Welltower, a real estate investment trust (REIT), owns interests in properties concentrated in markets in the United States, Canada and the United Kingdom, consisting of seniors housing and post-acute communities, and outpatient medical properties. Its triple-net properties include independent living facilities, independent supportive living facilities (Canada), continuing care retirement communities, assisted living facilities, care homes with and without nursing (the United Kingdom), Alzheimer’s/dementia care facilities, long-term/post-acute care facilities and hospitals. Its outpatient medical properties include outpatient medical buildings.
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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