Critical Analysis: Care Capital Properties (CCP) & Welltower (HCN)

Care Capital Properties (NYSE: CCP) and Welltower (NYSE:HCN) are both financials companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, analyst recommendations, valuation, institutional ownership, risk, earnings and dividends.

Profitability

This table compares Care Capital Properties and Welltower’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%
Welltower 28.94% 8.74% 4.39%

Volatility and Risk

Care Capital Properties has a beta of 0.38, suggesting that its stock price is 62% less volatile than the S&P 500. Comparatively, Welltower has a beta of 0.24, suggesting that its stock price is 76% less volatile than the S&P 500.

Insider & Institutional Ownership

88.9% of Care Capital Properties shares are held by institutional investors. Comparatively, 85.8% of Welltower shares are held by institutional investors. 1.7% of Care Capital Properties shares are held by company insiders. Comparatively, 0.2% of Welltower shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Care Capital Properties and Welltower, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Care Capital Properties 0 3 0 0 2.00
Welltower 2 9 6 0 2.24

Care Capital Properties presently has a consensus target price of $22.50, suggesting a potential downside of 5.38%. Welltower has a consensus target price of $72.69, suggesting a potential upside of 6.60%. Given Welltower’s stronger consensus rating and higher probable upside, analysts clearly believe Welltower is more favorable than Care Capital Properties.

Earnings & Valuation

This table compares Care Capital Properties and Welltower’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Care Capital Properties N/A N/A N/A $1.88 12.65
Welltower $4.19 billion 6.00 $2.05 billion $3.21 21.24

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

Dividends

Care Capital Properties pays an annual dividend of $2.28 per share and has a dividend yield of 9.6%. Welltower pays an annual dividend of $3.48 per share and has a dividend yield of 5.1%. Care Capital Properties pays out 121.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. 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. Welltower has increased its dividend for 7 consecutive years.

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.

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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