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

Dividends

Universal Health Realty Income Trust pays an annual dividend of $2.64 per share and has a dividend yield of 3.5%. CareTrust REIT pays an annual dividend of $0.74 per share and has a dividend yield of 4.0%. Universal Health Realty Income Trust pays out 81.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CareTrust REIT pays out 157.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CareTrust REIT has raised its dividend for 31 consecutive years. CareTrust REIT is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and target prices for Universal Health Realty Income Trust and CareTrust REIT, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Universal Health Realty Income Trust 0 0 0 0 N/A
CareTrust REIT 0 4 3 0 2.43

CareTrust REIT has a consensus price target of $19.14, suggesting a potential upside of 2.37%. Given CareTrust REIT’s higher possible upside, analysts plainly believe CareTrust REIT is more favorable than Universal Health Realty Income Trust.

Earnings & Valuation

This table compares Universal Health Realty Income Trust and CareTrust REIT’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Universal Health Realty Income Trust $67.08 million 15.40 $17.21 million $3.24 23.22
CareTrust REIT $104.68 million 13.56 $29.35 million $0.47 39.79

CareTrust REIT has higher revenue and earnings than Universal Health Realty Income Trust. Universal Health Realty Income 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.

Insider & Institutional Ownership

59.4% of Universal Health Realty Income Trust shares are held by institutional investors. Comparatively, 91.4% of CareTrust REIT shares are held by institutional investors. 1.9% of Universal Health Realty Income Trust shares are held by insiders. Comparatively, 1.6% of CareTrust REIT shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Universal Health Realty Income Trust 61.38% 8.12% 3.32%
CareTrust REIT 25.68% 5.76% 3.16%

Risk and Volatility

Universal Health Realty Income Trust has a beta of 0.35, meaning that its stock price is 65% less volatile than the S&P 500. Comparatively, CareTrust REIT has a beta of 0.83, meaning that its stock price is 17% less volatile than the S&P 500.

About Universal Health Realty Income Trust

Universal Health Realty Income Trust is a real estate investment trust (REIT). The Company invests in healthcare and human service related facilities, including acute care hospitals, rehabilitation hospitals, sub-acute facilities, surgery centers, free-standing emergency departments, childcare centers and medical office buildings (MOBs). As of February 28, 2017, the Company had 67 real estate investments located in 20 states in the United States consisting of six hospital facilities, including three acute care, one rehabilitation and two sub-acute; 54 MOBs; three free-standing emergency departments (FEDs), and four preschool and childcare centers. The Company’s facilities include Southwest Healthcare System, Inland Valley Campus, Wellington Regional Medical Center, Kindred Hospital Chicago Central, Vibra Hospital of Corpus Christi, Chesterbrook Academy, and Desert Valley Medical Center.

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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