Head to Head Review: National Health Investors (NHI) versus Preferred Apartment Communities (APTS)

National Health Investors (NYSE:NHI) and Preferred Apartment Communities (NYSE:APTS) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, risk, institutional ownership, earnings, valuation and profitability.

Risk & Volatility

National Health Investors has a beta of 0.3, meaning that its stock price is 70% less volatile than the S&P 500. Comparatively, Preferred Apartment Communities has a beta of 0.4, meaning that its stock price is 60% less volatile than the S&P 500.

Profitability

This table compares National Health Investors and Preferred Apartment Communities’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
National Health Investors 53.16% 11.49% 5.95%
Preferred Apartment Communities 1.21% 0.32% 0.12%

Valuation and Earnings

This table compares National Health Investors and Preferred Apartment Communities’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
National Health Investors $278.66 million 11.06 $159.36 million $5.33 13.71
Preferred Apartment Communities $294.01 million 2.17 $27.68 million $1.47 10.84

National Health Investors has higher earnings, but lower revenue than Preferred Apartment Communities. Preferred Apartment Communities is trading at a lower price-to-earnings ratio than National Health Investors, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

68.5% of National Health Investors shares are owned by institutional investors. Comparatively, 56.4% of Preferred Apartment Communities shares are owned by institutional investors. 5.2% of National Health Investors shares are owned by insiders. Comparatively, 1.6% of Preferred Apartment Communities shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Dividends

National Health Investors pays an annual dividend of $4.00 per share and has a dividend yield of 5.5%. Preferred Apartment Communities pays an annual dividend of $1.02 per share and has a dividend yield of 6.4%. National Health Investors pays out 75.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Preferred Apartment Communities pays out 69.4% of its earnings in the form of a dividend. National Health Investors has increased its dividend for 8 consecutive years and Preferred Apartment Communities has increased its dividend for 2 consecutive years. Preferred Apartment Communities is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of recent recommendations for National Health Investors and Preferred Apartment Communities, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
National Health Investors 1 5 4 0 2.30
Preferred Apartment Communities 0 2 3 0 2.60

National Health Investors currently has a consensus target price of $74.50, suggesting a potential upside of 1.96%. Preferred Apartment Communities has a consensus target price of $19.60, suggesting a potential upside of 22.96%. Given Preferred Apartment Communities’ stronger consensus rating and higher probable upside, analysts plainly believe Preferred Apartment Communities is more favorable than National Health Investors.

Summary

National Health Investors beats Preferred Apartment Communities on 11 of the 17 factors compared between the two stocks.

National Health Investors Company Profile

Incorporated in 1991, National Health Investors, Inc. (NYSE: NHI) is a real estate investment trust specializing in sale-leaseback, joint-venture, mortgage and mezzanine financing of need-driven and discretionary senior housing and medical investments. NHI's portfolio consists of independent, assisted and memory care communities, entrance-fee retirement communities, skilled nursing facilities, medical office buildings and specialty hospitals.

Preferred Apartment Communities Company Profile

Preferred Apartment Communities, Inc. (NYSE: APTS), or the Company, is a Maryland corporation formed primarily to acquire and operate multifamily properties in select targeted markets throughout the United States. As part of our business strategy, we may enter into forward purchase contracts or purchase options for to-be-built multifamily communities and we may make real estate related loans, provide deposit arrangements or provide performance assurances, as may be necessary or appropriate, in connection with the development of multifamily communities and other properties. As a secondary strategy, we may acquire or originate senior mortgage loans, subordinate loans or real estate loans secured by interests in multifamily properties, membership or partnership interests in multifamily properties and other multifamily related assets and invest a lesser portion of our assets in other real estate related investments, including other income-producing property types, senior mortgage loans, subordinate loans or real estate loans secured by interests in other income-producing property types or membership or partnership interests in other income-producing property types as determined by Preferred Apartment Advisors, LLC, or our Manager, as appropriate for us. At June 30, 2018, the Company was the approximate 97.4% owner of Preferred Apartment Communities Operating Partnership, L.P., or the Operating Partnership. We elected to be taxed as a real estate investment trust under the Internal Revenue Code of 1986, as amended, commencing with our tax year ended December 31, 2011.

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