Financial Analysis: Healthcare Realty Trust (NYSE:HR) versus CareTrust REIT (NYSE:CTRE)

Healthcare Realty Trust (NYSE:HR) and CareTrust REIT (NYSE:CTRE) are both mid-cap real estate companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, dividends, risk, institutional ownership, profitability, analyst recommendations and valuation.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Healthcare Realty Trust	-3.96%	-1.02%	-0.49%
CareTrust REIT	59.18%	8.08%	6.06%

Insider and Institutional Ownership

87.8% of CareTrust REIT shares are held by institutional investors. 0.6% of Healthcare Realty Trust shares are held by insiders. Comparatively, 0.7% of CareTrust REIT shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Healthcare Realty Trust and CareTrust REIT”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Healthcare Realty Trust	$1.18 billion	5.49	-$246.07 million	($0.14)	-136.74
CareTrust REIT	$476.39 million	20.61	$320.54 million	$1.59	23.96

CareTrust REIT has lower revenue, but higher earnings than Healthcare Realty Trust. Healthcare 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.

Analyst Ratings

This is a summary of recent recommendations and price targets for Healthcare Realty Trust and CareTrust REIT, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Healthcare Realty Trust	0	7	5	0	2.42
CareTrust REIT	0	4	10	1	2.80

Healthcare Realty Trust presently has a consensus target price of $21.55, suggesting a potential upside of 12.55%. CareTrust REIT has a consensus target price of $43.71, suggesting a potential upside of 14.74%. Given CareTrust REIT’s stronger consensus rating and higher possible upside, analysts plainly believe CareTrust REIT is more favorable than Healthcare Realty Trust.

Dividends

Healthcare Realty Trust pays an annual dividend of $0.96 per share and has a dividend yield of 5.0%. CareTrust REIT pays an annual dividend of $1.56 per share and has a dividend yield of 4.1%. Healthcare Realty Trust pays out -685.7% of its earnings in the form of a dividend. CareTrust REIT pays out 98.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CareTrust REIT has raised its dividend for 3 consecutive years. Healthcare Realty Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Healthcare Realty Trust has a beta of 0.92, suggesting that its share price is 8% less volatile than the S&P 500. Comparatively, CareTrust REIT has a beta of 0.77, suggesting that its share price is 23% less volatile than the S&P 500.

Summary

CareTrust REIT beats Healthcare Realty Trust on 14 of the 18 factors compared between the two stocks.

About Healthcare Realty Trust

Healthcare Realty Trust Incorporated is a real estate investment trust that owns, leases, and operates healthcare properties, with a focus on outpatient medical buildings. Its tenants include health systems, physician groups, and other healthcare providers. The company’s activities include leasing and managing medical office space, as well as acquiring and developing properties. Many of its buildings are located near hospitals or other healthcare campuses, supporting providers’ outpatient services.

About CareTrust REIT

CareTrust REIT, Inc. is a real estate investment trust that owns and invests in healthcare-related properties, with a focus on skilled nursing facilities and senior housing. Its portfolio also includes assisted living and other properties that serve older adults and people requiring healthcare services. The company primarily works with healthcare operators through long-term property leases and other real estate investments. CareTrust’s properties are located across the United States, and the company has expanded its investments into the United Kingdom.