Caretrust REIT (NASDAQ:CTRE) & AvalonBay Communities (NASDAQ:AVB) Head to Head Contrast

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

Profitability

This table compares Caretrust REIT and AvalonBay Communities’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Caretrust REIT 39.70% 8.08% 4.71%
AvalonBay Communities 41.83% 8.63% 4.92%

Institutional and Insider Ownership

84.1% of Caretrust REIT shares are owned by institutional investors. Comparatively, 92.0% of AvalonBay Communities shares are owned by institutional investors. 1.6% of Caretrust REIT shares are owned by company insiders. Comparatively, 0.4% of AvalonBay Communities shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Caretrust REIT and AvalonBay Communities’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Caretrust REIT $156.94 million 14.44 $57.92 million $1.28 18.53
AvalonBay Communities $2.28 billion 12.60 $974.53 million $9.00 22.91

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

Analyst Recommendations

This is a summary of recent ratings and target prices for Caretrust REIT and AvalonBay Communities, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Caretrust REIT 0 1 5 0 2.83
AvalonBay Communities 0 9 7 0 2.44

Caretrust REIT presently has a consensus price target of $24.00, indicating a potential upside of 1.18%. AvalonBay Communities has a consensus price target of $211.00, indicating a potential upside of 2.35%. Given AvalonBay Communities’ higher probable upside, analysts plainly believe AvalonBay Communities is more favorable than Caretrust REIT.

Dividends

Caretrust REIT pays an annual dividend of $0.90 per share and has a dividend yield of 3.8%. AvalonBay Communities pays an annual dividend of $6.08 per share and has a dividend yield of 2.9%. Caretrust REIT pays out 70.3% of its earnings in the form of a dividend. AvalonBay Communities pays out 67.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Caretrust REIT has increased its dividend for 3 consecutive years and AvalonBay Communities has increased its dividend for 7 consecutive years.

Volatility and Risk

Caretrust REIT has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500. Comparatively, AvalonBay Communities has a beta of 0.53, indicating that its share price is 47% less volatile than the S&P 500.

Summary

AvalonBay Communities beats Caretrust REIT on 12 of the 17 factors compared between the two stocks.

About Caretrust REIT

CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition and leasing of seniors housing and healthcare-related properties. With 199 net-leased healthcare properties and three operated seniors housing properties in 27 states, CareTrust is pursuing opportunities across the nation to acquire properties that will be leased to a diverse group of local, regional and national seniors housing operators, healthcare services providers, and other healthcare-related businesses.

About AvalonBay Communities

As of March 31, 2019, the Company owned or held a direct or indirect ownership interest in 291 apartment communities containing 85,313 apartment homes in 12 states and the District of Columbia, of which 19 communities were under development and nine communities were under redevelopment. The Company is an equity REIT in the business of developing, redeveloping, acquiring and managing apartment communities in leading metropolitan areas primarily in New England, the New York/New Jersey Metro area, the Mid-Atlantic, the Pacific Northwest, and the Northern and Southern California regions of the United States.

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