Financial Analysis: Omega Healthcare Investors (OHI) vs. Welltower (HCN)

Omega Healthcare Investors (NYSE: OHI) and Welltower (NYSE:HCN) are both mid-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, analyst recommendations, valuation, institutional ownership, earnings, profitability and risk.

Institutional and Insider Ownership

72.8% of Omega Healthcare Investors shares are held by institutional investors. Comparatively, 85.8% of Welltower shares are held by institutional investors. 1.5% of Omega Healthcare Investors shares are held by insiders. Comparatively, 0.2% of Welltower shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and price targets for Omega Healthcare Investors and Welltower, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Omega Healthcare Investors 0 2 0 0 2.00
Welltower 2 8 6 0 2.25

Omega Healthcare Investors presently has a consensus price target of $31.50, suggesting a potential downside of 0.51%. Welltower has a consensus price target of $72.69, suggesting a potential upside of 6.79%. Given Welltower’s stronger consensus rating and higher possible upside, analysts clearly believe Welltower is more favorable than Omega Healthcare Investors.

Risk & Volatility

Omega Healthcare Investors has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500. Comparatively, Welltower has a beta of 0.24, indicating that its stock price is 76% less volatile than the S&P 500.

Dividends

Omega Healthcare Investors pays an annual dividend of $2.56 per share and has a dividend yield of 8.1%. Welltower pays an annual dividend of $3.48 per share and has a dividend yield of 5.1%. Omega Healthcare Investors pays out 135.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Welltower pays out 108.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Omega Healthcare Investors has raised its dividend for 7 consecutive years and Welltower has raised its dividend for 7 consecutive years.

Profitability

This table compares Omega Healthcare Investors and Welltower’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Omega Healthcare Investors 40.20% 8.88% 4.17%
Welltower 28.94% 8.74% 4.39%

Earnings & Valuation

This table compares Omega Healthcare Investors and Welltower’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Omega Healthcare Investors $926.66 million 6.74 $853.50 million $1.89 16.75
Welltower $4.19 billion 5.99 $2.05 billion $3.21 21.21

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

Summary

Welltower beats Omega Healthcare Investors on 10 of the 16 factors compared between the two stocks.

About Omega Healthcare Investors

Omega Healthcare Investors, Inc. is a self-administered real estate investment trust (REIT). The Company maintains a portfolio of long-term healthcare facilities and mortgages on healthcare facilities located in the United States and the United Kingdom. It operates through the segment, which consists of investments in healthcare-related real estate properties. It provides lease or mortgage financing to qualified operators of skilled nursing facilities (SNFs) and assisted living facilities (ALFs), independent living facilities, rehabilitation and acute care facilities. Its portfolio consists of long-term leases and mortgage agreements. As of December 31, 2016, its portfolio of investments included 996 healthcare facilities located in 42 states and the United Kingdom and operated by 79 third-party operators. As of December 31, 2016, the Company’s portfolio consisted of 809 SNFs, 101 ALFs, 16 specialty facilities, one medical office building, fixed rate mortgages on 44 SNFs and two ALFs.

About Welltower

Welltower Inc. invests with seniors housing operators, post-acute providers and health systems to fund real estate and infrastructure. The Company invests in seniors housing and healthcare real estate. It operates in three segments: triple-net, seniors housing operating and outpatient medical. Welltower, a real estate investment trust (REIT), owns interests in properties concentrated in markets in the United States, Canada and the United Kingdom, consisting of seniors housing and post-acute communities, and outpatient medical properties. Its triple-net properties include independent living facilities, independent supportive living facilities (Canada), continuing care retirement communities, assisted living facilities, care homes with and without nursing (the United Kingdom), Alzheimer’s/dementia care facilities, long-term/post-acute care facilities and hospitals. Its outpatient medical properties include outpatient medical buildings.

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