CareTrust REIT (CTRE) and Sabra Healthcare REIT (SBRA) Critical Comparison

CareTrust REIT (NASDAQ: CTRE) and Sabra Healthcare REIT (NASDAQ:SBRA) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, profitability, earnings, analyst recommendations, institutional ownership, dividends and valuation.

Dividends

Sabra Healthcare REIT pays an annual dividend of $1.72 per share and has a dividend yield of 8.0%. CareTrust REIT does not pay a dividend. Sabra Healthcare REIT pays out 145.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider & Institutional Ownership

87.5% of CareTrust REIT shares are owned by institutional investors. Comparatively, 99.3% of Sabra Healthcare REIT shares are owned by institutional investors. 1.6% of CareTrust REIT shares are owned by company insiders. Comparatively, 2.3% of Sabra Healthcare REIT shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares CareTrust REIT and Sabra Healthcare REIT’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CareTrust REIT $118.79 million 11.50 $96.91 million $0.45 40.00
Sabra Healthcare REIT $251.10 million 5.59 $210.73 million $1.18 18.18

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

Volatility and Risk

CareTrust REIT has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500. Comparatively, Sabra Healthcare REIT has a beta of 0.89, indicating that its share price is 11% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for CareTrust REIT and Sabra Healthcare REIT, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CareTrust REIT 0 4 3 0 2.43
Sabra Healthcare REIT 1 6 1 0 2.00

CareTrust REIT presently has a consensus price target of $17.67, indicating a potential downside of 1.85%. Sabra Healthcare REIT has a consensus price target of $25.67, indicating a potential upside of 19.66%. Given Sabra Healthcare REIT’s higher probable upside, analysts clearly believe Sabra Healthcare REIT is more favorable than CareTrust REIT.

Profitability

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

Net Margins Return on Equity Return on Assets
CareTrust REIT 24.02% 5.76% 3.03%
Sabra Healthcare REIT 34.99% 8.72% 3.90%

Summary

Sabra Healthcare REIT beats CareTrust REIT on 11 of the 16 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.

Sabra Healthcare REIT Company Profile

Sabra Health Care REIT, Inc. is a real estate investment trust. The Company, through its subsidiaries, owns and invests in real estate serving the healthcare industry. The Company’s segment includes investments in healthcare-related real estate properties. The Company’s primary business consists of acquiring, financing and owning real estate property to be leased to third-party tenants in the healthcare sector. As of December 31, 2016, the Company’s investment portfolio consisted of 183 real estate properties held for investment (consisting of 97 skilled nursing/transitional care facilities, 85 senior housing facilities, and one acute care hospital); 10 investments in loans receivable (consisting of four mortgage loans, one construction loan, one mezzanine loan, three pre-development loans and one debtor-in-possession (DIP) loan) and 12 preferred equity investments. It has properties located in New Hampshire, Texas, Florida, Kentucky, Ohio, Maryland and Nebraska, among others.

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