Care Capital Properties (NYSE: CCP) and HCP (NYSE:HCP) are both mid-cap healthcare reits companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, risk, profitability, analyst recommendations, valuation, earnings and dividends.
Insider and Institutional Ownership
88.9% of Care Capital Properties shares are held by institutional investors. Comparatively, 91.1% of HCP shares are held by institutional investors. 1.7% of Care Capital Properties shares are held by insiders. Comparatively, 0.2% of HCP shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
This table compares Care Capital Properties and HCP’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Care Capital Properties||109.47%||40.07%||16.26%|
Care Capital Properties pays an annual dividend of $2.28 per share and has a dividend yield of 9.4%. HCP pays an annual dividend of $1.48 per share and has a dividend yield of 5.5%. Care Capital Properties pays out 78.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. HCP pays out 133.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Care Capital Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings and Valuation
This table compares Care Capital Properties and HCP’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Care Capital Properties||N/A||N/A||N/A||$2.90||8.35|
|HCP||$2.13 billion||5.95||$627.74 million||$1.11||24.33|
HCP has higher revenue and earnings than Care Capital Properties. Care Capital Properties is trading at a lower price-to-earnings ratio than HCP, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings and target prices for Care Capital Properties and HCP, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Care Capital Properties||0||3||0||0||2.00|
Care Capital Properties currently has a consensus target price of $22.50, suggesting a potential downside of 7.06%. HCP has a consensus target price of $31.42, suggesting a potential upside of 16.31%. Given HCP’s stronger consensus rating and higher possible upside, analysts plainly believe HCP is more favorable than Care Capital Properties.
Care Capital Properties beats HCP on 7 of the 12 factors compared between the two stocks.
About Care Capital Properties
Care Capital Properties, Inc. is a self-administered, self-managed real estate investment trust with a diversified portfolio of skilled nursing facilities (SNFs) and other healthcare assets operated by private regional and local care providers. The Company leases its properties to unaffiliated tenants under long-term triple-net leases, pursuant to which the tenants are obligated to pay all property-related expenses, including maintenance, utilities, repairs and taxes. It also manages a small portfolio of secured and unsecured loans, made primarily to its SNF operators and other post-acute care providers. As of December 31, 2016, its portfolio consisted of 345 properties operated by 38 private regional and local care providers, spread across 36 states and containing a total of approximately 38,000 beds/units. It conducts all of its operations through its operating partnership, Care Capital Properties, LP, and its subsidiaries.
HCP, Inc. is a self-administered real estate investment trust. The Company invests in real estate serving the healthcare industry in the United States. The Company’s segments include senior housing triple-net (SH NNN), senior housing operating portfolio (SHOP), life science and medical office. Its senior housing facilities include independent living facilities, assisted living facilities, memory care facilities, care homes, and continuing care retirement communities. Its Life science properties contain laboratory and office space for biotechnology, medical device and pharmaceutical companies, scientific research institutions, government agencies and other organizations. Its Medical office buildings contain physicians’ offices and examination rooms, and may include pharmacies, hospital ancillary service space and outpatient services. As of December 31, 2016, it had interests in and managed 15 hospitals, 61 care homes in the United Kingdom and five post-acute/skilled nursing facilities.
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