CareTrust REIT (NASDAQ: CTRE) and Community Healthcare Trust (NYSE:CHCT) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, valuation, earnings, profitabiliy, institutional ownership, risk and dividends.

Volatility and Risk

CareTrust REIT has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500. Comparatively, Community Healthcare Trust has a beta of 1.04, suggesting that its share price is 4% more volatile than the S&P 500.

Institutional & Insider Ownership

87.5% of CareTrust REIT shares are owned by institutional investors. Comparatively, 59.3% of Community Healthcare Trust shares are owned by institutional investors. 1.6% of CareTrust REIT shares are owned by company insiders. Comparatively, 5.5% of Community Healthcare Trust shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations and price targets for CareTrust REIT and Community Healthcare Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CareTrust REIT 0 4 3 0 2.43
Community Healthcare Trust 0 0 1 0 3.00

CareTrust REIT presently has a consensus target price of $17.67, suggesting a potential downside of 1.52%. Community Healthcare Trust has a consensus target price of $26.50, suggesting a potential upside of 6.51%. Given Community Healthcare Trust’s stronger consensus rating and higher possible upside, analysts plainly believe Community Healthcare Trust is more favorable than CareTrust REIT.

Dividends

Community Healthcare Trust pays an annual dividend of $1.56 per share and has a dividend yield of 6.3%. CareTrust REIT does not pay a dividend. Community Healthcare Trust pays out 577.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares CareTrust REIT and Community Healthcare Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CareTrust REIT 24.02% 5.76% 3.03%
Community Healthcare Trust 11.30% 1.79% 1.41%

Valuation and Earnings

This table compares CareTrust REIT and Community Healthcare Trust’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CareTrust REIT $118.79 million 11.46 $96.91 million $0.45 39.87
Community Healthcare Trust $30.77 million 10.26 $20.95 million $0.27 92.15

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

Summary

CareTrust REIT beats Community Healthcare Trust on 10 of the 16 factors compared between the two stocks.

CareTrust REIT Company Profile

CareTrust REIT, Inc. is a self-administered, self-managed real estate investment trust. The Company is engaged in the ownership, acquisition and leasing of healthcare-related properties. It makes investments in healthcare-related real estate assets. As of December 31, 2016, its real estate portfolio included 154 skilled nursing facilities (SNFs), SNF Campuses, assisted living facilities and independent living facilities. As of December 31, 2016, the 93 facilities leased to The Ensign Group, Inc. had a total of 9,916 beds and units and are located in Arizona, California, Colorado, Idaho, Iowa, Nebraska, Nevada, Texas, Utah and Washington; the 16 facilities leased to affiliates of Pristine Senior Living, LLC had a total of 1,488 beds and units; and the 42 remaining leased properties had a total of 3,515 beds and units and are located in California, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Maryland, Michigan, Minnesota, North Carolina, Texas, Virginia, Washington and Wisconsin.

Community Healthcare Trust Company Profile

Community Healthcare Trust Incorporated is an integrated healthcare real estate company. The Company owns and acquires, or finances, real estate properties that are leased to hospitals, doctors, healthcare systems or other healthcare service providers in non-urban markets. It has investments in healthcare real estate, including mortgage and other loans. The Company’s medical office buildings are located in areas, such as, Florida, Georgia, Illinois, Kentucky, Ohio and Texas. Its physician clinics are located in Alabama, Florida, Kansas, Pennsylvania and Wisconsin. Its surgical centers and hospitals are located in areas, such as Louisiana, Michigan and Arizona. Its behavioral facilities are located in Indiana and Illinois. Its specialty centers are located in Texas, Colorado and Alabama, among others. As of December 31, 2016, the Company had interests in 57 real estate properties and one mortgage note, located in 22 states, totaling over 1.33 million square feet in the aggregate.

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