CareTrust REIT (NYSE:CTRE) & Diversified Healthcare Trust (NASDAQ:DHC) Critical Survey

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

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Diversified Healthcare Trust	$1.54 billion	1.40	-$285.89 million	($1.33)	-6.69
CareTrust REIT	$476.39 million	20.85	$320.54 million	$1.56	26.95

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

Risk and Volatility

Diversified Healthcare Trust has a beta of 2.28, indicating that its share price is 128% more volatile than the S&P 500. Comparatively, CareTrust REIT has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for Diversified Healthcare Trust and CareTrust REIT, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Diversified Healthcare Trust	1	2	2	1	2.50
CareTrust REIT	0	2	10	1	2.92

Diversified Healthcare Trust presently has a consensus target price of $9.83, suggesting a potential upside of 10.49%. CareTrust REIT has a consensus target price of $44.82, suggesting a potential upside of 6.60%. Given Diversified Healthcare Trust’s higher probable upside, research analysts plainly believe Diversified Healthcare Trust is more favorable than CareTrust REIT.

Insider and Institutional Ownership

76.0% of Diversified Healthcare Trust shares are owned by institutional investors. Comparatively, 87.8% of CareTrust REIT shares are owned by institutional investors. 10.2% of Diversified Healthcare Trust shares are owned by insiders. Comparatively, 0.7% of CareTrust REIT shares are owned by 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Diversified Healthcare Trust	-21.10%	-18.75%	-7.09%
CareTrust REIT	64.10%	8.65%	6.66%

Dividends

Diversified Healthcare Trust pays an annual dividend of $0.04 per share and has a dividend yield of 0.4%. CareTrust REIT pays an annual dividend of $1.56 per share and has a dividend yield of 3.7%. Diversified Healthcare Trust pays out -3.0% of its earnings in the form of a dividend. CareTrust REIT pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CareTrust REIT has raised its dividend for 3 consecutive years. CareTrust REIT is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

CareTrust REIT beats Diversified Healthcare Trust on 12 of the 17 factors compared between the two stocks.

About Diversified Healthcare Trust

Diversified Healthcare Trust is a real estate investment trust, which engages in the ownership of senior living communities, medical office buildings, and wellness centers. It operates through the following segments: Office Portfolio, Senior Housing Operating Portfolio (SHOP), and Non-Segment. The Office Portfolio segment consists of medical office properties leased to medical providers and other medical related businesses, as well as life science properties leased to biotech laboratories and other similar tenants. The SHOP segment manages senior living communities that offers short term and long term residential care, and other services for residents where it pay fees to the operator to manage the communities for its account. The company was founded on December 16, 1998 and is headquartered in Newton, MA.

About CareTrust REIT

CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition, development and leasing of skilled nursing, seniors housing and other healthcare-related properties. With a nationwide portfolio of long-term net-leased properties, and a growing portfolio of quality operators leasing them, CareTrust REIT is pursuing both external and organic growth opportunities across the United States.