MedEquities Realty Trust (NYSE: MRT) and CareTrust REIT (NASDAQ:CTRE) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, risk, earnings, profitability, dividends, valuation and analyst recommendations.

Insider and Institutional Ownership

92.9% of MedEquities Realty Trust shares are held by institutional investors. Comparatively, 89.4% of CareTrust REIT shares are held by institutional investors. 2.5% of MedEquities Realty Trust shares are held by insiders. Comparatively, 1.6% of CareTrust REIT shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
MedEquities Realty Trust 32.68% 5.58% 3.52%
CareTrust REIT 24.02% 5.76% 3.03%

Earnings and Valuation

This table compares MedEquities Realty Trust and CareTrust REIT’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
MedEquities Realty Trust $56.96 million 6.50 $46.67 million $0.35 33.30
CareTrust REIT N/A N/A N/A $0.45 43.33

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

Analyst Ratings

This is a summary of current recommendations and price targets for MedEquities Realty Trust and CareTrust REIT, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MedEquities Realty Trust 1 1 6 0 2.63
CareTrust REIT 0 4 3 0 2.43

MedEquities Realty Trust currently has a consensus target price of $13.00, suggesting a potential upside of 11.54%. CareTrust REIT has a consensus target price of $18.33, suggesting a potential downside of 5.98%. Given MedEquities Realty Trust’s stronger consensus rating and higher possible upside, equities research analysts plainly believe MedEquities Realty Trust is more favorable than CareTrust REIT.

Dividends

MedEquities Realty Trust pays an annual dividend of $0.84 per share and has a dividend yield of 7.2%. CareTrust REIT does not pay a dividend. MedEquities Realty Trust pays out 240.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

MedEquities Realty Trust beats CareTrust REIT on 9 of the 13 factors compared between the two stocks.

About MedEquities Realty Trust

MedEquities Realty Trust, Inc. is a real estate investment trust (REIT). The Company invests in a diversified mix of healthcare properties and healthcare-related real estate debt investments. The Company invests primarily in real estate across the acute and post-acute spectrum of care. It focuses on investing in various types of healthcare properties, including acute care hospitals; skilled nursing facilities; short-stay surgical and specialty hospitals, which focus on orthopedic, heart and other dedicated surgeries and specialty procedures; dedicated specialty hospitals, such as inpatient rehabilitation facilities, long-term acute care hospitals and facilities providing psychiatric care; physician clinics; diagnostic facilities; outpatient surgery centers, and facilities that support these services, such as medical office buildings. As of September 30, 2016, the Company’s portfolio included 24 healthcare facilities and one healthcare-related debt investment.

About CareTrust REIT

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.

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