Critical Analysis: Ventas (VTR) and Healthcare Trust of America (NYSE:HTA)

Ventas (NYSE: VTR) and Healthcare Trust of America (NYSE:HTA) are both mid-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, institutional ownership, valuation, dividends, risk, analyst recommendations and earnings.

Volatility & Risk

Ventas has a beta of 0.07, indicating that its stock price is 93% less volatile than the S&P 500. Comparatively, Healthcare Trust of America has a beta of 0.32, indicating that its stock price is 68% less volatile than the S&P 500.

Profitability

This table compares Ventas and Healthcare Trust of America’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ventas	20.08%	6.31%	2.81%
Healthcare Trust of America	6.07%	1.42%	0.70%

Valuation & Earnings

This table compares Ventas and Healthcare Trust of America’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Ventas	$3.52 billion	6.73	$1.88 billion	$1.97	33.77
Healthcare Trust of America	$504.67 million	12.10	$301.67 million	$0.21	144.95

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

Analyst Recommendations

This is a summary of current ratings and recommmendations for Ventas and Healthcare Trust of America, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ventas	3	7	0	0	1.70
Healthcare Trust of America	0	0	8	1	3.11

Ventas presently has a consensus target price of $62.33, suggesting a potential downside of 6.31%. Healthcare Trust of America has a consensus target price of $34.50, suggesting a potential upside of 13.34%. Given Healthcare Trust of America’s stronger consensus rating and higher possible upside, analysts clearly believe Healthcare Trust of America is more favorable than Ventas.

Dividends

Ventas pays an annual dividend of $3.10 per share and has a dividend yield of 4.7%. Healthcare Trust of America pays an annual dividend of $1.20 per share and has a dividend yield of 3.9%. Ventas pays out 157.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Healthcare Trust of America pays out 571.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ventas has raised its dividend for 4 consecutive years and Healthcare Trust of America has raised its dividend for 6 consecutive years. Ventas is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

88.6% of Ventas shares are held by institutional investors. Comparatively, 70.9% of Healthcare Trust of America shares are held by institutional investors. 1.3% of Ventas shares are held by insiders. Comparatively, 1.5% of Healthcare Trust of America shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Ventas Company Profile

Ventas, Inc. is a real estate investment trust (REIT) with its properties located throughout the United States, Canada and the United Kingdom. The Company operates through three segments: triple-net leased properties, senior living operations and office operations. Under its triple-net leased properties segment, the Company invests in and owns seniors housing and healthcare properties throughout the United States and the United Kingdom and leases those properties to healthcare operating companies under triple-net or absolute-net leases that obligate the tenants to pay all property-related expenses. In its senior living operations segment, it invests in seniors housing communities throughout the United States and Canada and engages independent operators to manage those communities. In its office operations segment, the Company primarily acquires, owns, develops, leases and manages medical office buildings (MOBs) and life science and innovation centers throughout the United States.

Healthcare Trust of America Company Profile

Healthcare Trust of America, Inc. is a real estate investment trust. The Company is an owner and operator of medical office buildings (MOBs) in the United States. The Company focuses on owning and operating MOBs that serve healthcare delivery and are located on health system campuses, near university medical centers, or in community core outpatient locations. As of December 31, 2016, the Company’s portfolio consisted of approximately 17.7 million square feet of gross leasable area. As of December 31, 2016, the Company’s portfolio included MOBs, such as single-tenant and multi-tenant, and other healthcare facilities, such as hospitals and senior care. As of December 31, 2016, the Company’s portfolio had 355 buildings located in 31 states. As of December 31, 2016, the Company’s properties were located in various states of the United States, such as Alabama, Arizona, California, Colorado, Florida, Georgia, Hawaii, Illinois, Indiana, Kansas, Maryland, Michigan, Minnesota, Nevada and Utah.