Reviewing LTC Properties (LTC) and CareTrust REIT (CTRE)

CareTrust REIT (NASDAQ: CTRE) and LTC Properties (NYSE:LTC) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitabiliy, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Valuation and Earnings

This table compares CareTrust REIT and LTC Properties’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CareTrust REIT N/A N/A N/A $0.55 33.16
LTC Properties $165.48 million 12.05 $147.17 million $2.22 22.69

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

Profitability

This table compares CareTrust REIT and LTC Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CareTrust REIT 30.57% 7.87% 3.86%
LTC Properties 52.17% 11.66% 6.24%

Dividends

LTC Properties pays an annual dividend of $2.28 per share and has a dividend yield of 4.5%. CareTrust REIT does not pay a dividend. LTC Properties pays out 102.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. LTC Properties has raised its dividend for 5 consecutive years.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for CareTrust REIT and LTC Properties, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CareTrust REIT 0 5 3 0 2.38
LTC Properties 0 6 2 0 2.25

CareTrust REIT currently has a consensus price target of $17.67, suggesting a potential downside of 3.14%. LTC Properties has a consensus price target of $52.67, suggesting a potential upside of 4.56%. Given LTC Properties’ higher probable upside, analysts clearly believe LTC Properties is more favorable than CareTrust REIT.

Risk and Volatility

CareTrust REIT has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500. Comparatively, LTC Properties has a beta of 0.12, meaning that its stock price is 88% less volatile than the S&P 500.

Institutional & Insider Ownership

86.7% of CareTrust REIT shares are owned by institutional investors. Comparatively, 83.4% of LTC Properties shares are owned by institutional investors. 1.6% of CareTrust REIT shares are owned by insiders. Comparatively, 1.7% of LTC Properties shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

LTC Properties beats CareTrust REIT on 10 of the 15 factors compared between the two stocks.

CareTrust REIT Company Profile

CareTrust REIT, Inc. is a self-administered, self-managed real estate investment trust. The Company is engaged in the ownership, acquisition and leasing of healthcare-related properties. It makes investments in healthcare-related real estate assets. As of December 31, 2016, its real estate portfolio included 154 skilled nursing facilities (SNFs), SNF Campuses, assisted living facilities and independent living facilities. As of December 31, 2016, the 93 facilities leased to The Ensign Group, Inc. had a total of 9,916 beds and units and are located in Arizona, California, Colorado, Idaho, Iowa, Nebraska, Nevada, Texas, Utah and Washington; the 16 facilities leased to affiliates of Pristine Senior Living, LLC had a total of 1,488 beds and units; and the 42 remaining leased properties had a total of 3,515 beds and units and are located in California, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Maryland, Michigan, Minnesota, North Carolina, Texas, Virginia, Washington and Wisconsin.

LTC Properties Company Profile

LTC Properties Inc. is a healthcare real estate investment trust (REIT). The Company invests in senior housing and healthcare properties through sale-leaseback transactions, mortgage financing and structured finance solutions, including mezzanine lending. It invests in various properties, including Skilled nursing facilities (SNF), Assisted living facilities (ALF), Independent living facilities (ILF), Memory care facilities (MC) and Range of care facilities (ROC). SNF provides restorative, rehabilitative and nursing care. Many skilled nursing facilities provide ancillary services that include occupational, speech, physical, respiratory and IV therapies, as well as sub-acute care services, which are paid either by the patient, the patient’s family, private health insurance, or through the federal Medicare or state Medicaid programs. ALF serves people requiring assistance with activities of daily living, but do not require the constant supervision skilled nursing facilities provide.

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