Omega Healthcare Investors (NYSE: OHI) and Sabra Healthcare REIT (NASDAQ:SBRA) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, earnings, institutional ownership, risk, valuation, profitabiliy and analyst recommendations.

Dividends

Omega Healthcare Investors pays an annual dividend of $2.56 per share and has a dividend yield of 8.2%. Sabra Healthcare REIT pays an annual dividend of $1.72 per share and has a dividend yield of 7.3%. 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. Sabra Healthcare REIT pays out 145.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sabra Healthcare REIT has raised its dividend for 7 consecutive years. Omega Healthcare Investors is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Omega Healthcare Investors has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500. Comparatively, Sabra Healthcare REIT has a beta of 0.89, suggesting that its share price is 11% less volatile than the S&P 500.

Profitability

This table compares Omega Healthcare Investors and Sabra Healthcare REIT’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%
Sabra Healthcare REIT 34.99% 8.72% 3.90%

Valuation and Earnings

This table compares Omega Healthcare Investors and Sabra Healthcare REIT’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Omega Healthcare Investors $926.66 million 6.63 $853.15 million $1.89 16.48
Sabra Healthcare REIT $251.10 million 6.10 $206.23 million $1.18 19.84

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

Analyst Recommendations

This is a summary of current recommendations and price targets for Omega Healthcare Investors and Sabra Healthcare REIT, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Omega Healthcare Investors 0 4 0 0 2.00
Sabra Healthcare REIT 1 6 1 0 2.00

Omega Healthcare Investors presently has a consensus price target of $33.00, indicating a potential upside of 5.94%. Sabra Healthcare REIT has a consensus price target of $25.67, indicating a potential upside of 9.64%. Given Sabra Healthcare REIT’s higher probable upside, analysts plainly believe Sabra Healthcare REIT is more favorable than Omega Healthcare Investors.

Insider and Institutional Ownership

73.6% of Omega Healthcare Investors shares are owned by institutional investors. Comparatively, 99.3% of Sabra Healthcare REIT shares are owned by institutional investors. 4.5% of Omega Healthcare Investors shares are owned by insiders. Comparatively, 2.3% of Sabra Healthcare REIT shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

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

Omega Healthcare Investors Company Profile

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.

Sabra Healthcare REIT Company Profile

Sabra Health Care REIT, Inc. is a real estate investment trust. The Company, through its subsidiaries, owns and invests in real estate serving the healthcare industry. The Company’s segment includes investments in healthcare-related real estate properties. The Company’s primary business consists of acquiring, financing and owning real estate property to be leased to third-party tenants in the healthcare sector. As of December 31, 2016, the Company’s investment portfolio consisted of 183 real estate properties held for investment (consisting of 97 skilled nursing/transitional care facilities, 85 senior housing facilities, and one acute care hospital); 10 investments in loans receivable (consisting of four mortgage loans, one construction loan, one mezzanine loan, three pre-development loans and one debtor-in-possession (DIP) loan) and 12 preferred equity investments. It has properties located in New Hampshire, Texas, Florida, Kentucky, Ohio, Maryland and Nebraska, among others.

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