Critical Contrast: Five Star Senior Living (FVE) and Brookdale Senior Living (BKD)

Five Star Senior Living (NASDAQ: FVE) and Brookdale Senior Living (NYSE:BKD) are both small-cap medical companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, profitability, dividends and risk.

Profitability

This table compares Five Star Senior Living and Brookdale Senior Living’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Five Star Senior Living -1.83% -18.10% -5.59%
Brookdale Senior Living -17.85% -0.79% -0.17%

Volatility & Risk

Five Star Senior Living has a beta of 1.01, indicating that its stock price is 1% more volatile than the S&P 500. Comparatively, Brookdale Senior Living has a beta of 1.73, indicating that its stock price is 73% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations for Five Star Senior Living and Brookdale Senior Living, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Five Star Senior Living 0 0 2 0 3.00
Brookdale Senior Living 0 0 5 0 3.00

Five Star Senior Living currently has a consensus price target of $3.88, suggesting a potential upside of 158.33%. Brookdale Senior Living has a consensus price target of $15.30, suggesting a potential upside of 55.80%. Given Five Star Senior Living’s higher probable upside, equities research analysts clearly believe Five Star Senior Living is more favorable than Brookdale Senior Living.

Institutional and Insider Ownership

21.3% of Five Star Senior Living shares are held by institutional investors. Comparatively, 99.9% of Brookdale Senior Living shares are held by institutional investors. 39.8% of Five Star Senior Living shares are held by insiders. Comparatively, 1.5% of Brookdale Senior Living shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Five Star Senior Living and Brookdale Senior Living’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Five Star Senior Living $1.38 billion 0.05 -$21.81 million ($0.51) -2.94
Brookdale Senior Living $4.98 billion 0.37 -$404.39 million ($4.60) -2.13

Five Star Senior Living has higher earnings, but lower revenue than Brookdale Senior Living. Five Star Senior Living is trading at a lower price-to-earnings ratio than Brookdale Senior Living, indicating that it is currently the more affordable of the two stocks.

Summary

Brookdale Senior Living beats Five Star Senior Living on 7 of the 12 factors compared between the two stocks.

About Five Star Senior Living

Five Star Senior Living Inc., formerly Five Star Quality Care, Inc., operates senior living communities, including independent living communities, assisted living communities and skilled nursing facilities (SNFs). The Company’s segments include senior living communities and rehabilitation and wellness. In the senior living communities segment, the Company operates for its own account or manage for the account of others independent living communities, assisted living communities and SNFs that are subject to centralized oversight and provide housing and services to elderly residents. In the rehabilitation and wellness segment, the Company provides services in the inpatient setting and in outpatient clinics. As of December 31, 2016, the Company operated 283 senior living communities located in 32 states with 31,830 living units, including 253 primarily independent and assisted living communities with 29,229 living units and 30 SNFs with 2,601 living units.

About Brookdale Senior Living

Brookdale Senior Living Inc. operates senior living communities in the United States. The Company operates independent living, assisted living and dementia-care communities, and continuing care retirement centers (CCRCs). It operates through five segments: Retirement Centers; Assisted Living; CCRCs-Rental; Brookdale Ancillary Services and Management Services. The Retirement Centers segment includes owned or leased communities for middle to upper income seniors. The Assisted Living segment includes owned or leased communities that offer housing and round the clock assistance with activities of daily life to mid-acuity frail and elderly residents. The CCRCs-Rental segment includes leased communities that offer living arrangements to accommodate physical ability and health. The Brookdale Ancillary Services segment includes outpatient therapy, home health and hospice services, as well as education and wellness programs. The Management Services segment includes communities operated by it.

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