National Health Investors (NYSE: NHI) and MedEquities Realty Trust (NYSE:MRT) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, earnings, institutional ownership and risk.
National Health Investors pays an annual dividend of $3.80 per share and has a dividend yield of 4.8%. MedEquities Realty Trust pays an annual dividend of $0.84 per share and has a dividend yield of 7.2%. National Health Investors pays out 97.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. 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. MedEquities Realty Trust has raised its dividend for 7 consecutive years. MedEquities Realty Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares National Health Investors and MedEquities Realty Trust’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|National Health Investors||$263.75 million||12.43||$257.02 million||$3.89||20.56|
|MedEquities Realty Trust||$56.96 million||6.54||$46.67 million||$0.35||33.51|
National Health Investors has higher revenue and earnings than MedEquities Realty Trust. National Health Investors is trading at a lower price-to-earnings ratio than MedEquities Realty Trust, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings and price targets for National Health Investors and MedEquities Realty Trust, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|National Health Investors||1||2||1||0||2.00|
|MedEquities Realty Trust||1||1||6||0||2.63|
National Health Investors presently has a consensus target price of $77.67, indicating a potential downside of 2.90%. MedEquities Realty Trust has a consensus target price of $13.00, indicating a potential upside of 10.83%. Given MedEquities Realty Trust’s stronger consensus rating and higher probable upside, analysts plainly believe MedEquities Realty Trust is more favorable than National Health Investors.
Institutional and Insider Ownership
70.6% of National Health Investors shares are held by institutional investors. Comparatively, 92.9% of MedEquities Realty Trust shares are held by institutional investors. 5.2% of National Health Investors shares are held by insiders. Comparatively, 2.5% of MedEquities Realty Trust shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
This table compares National Health Investors and MedEquities Realty Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|National Health Investors||59.24%||12.56%||6.38%|
|MedEquities Realty Trust||32.68%||5.58%||3.52%|
National Health Investors beats MedEquities Realty Trust on 10 of the 16 factors compared between the two stocks.
About National Health Investors
National Health Investors, Inc. is a self-managed real estate investment trust (REIT) specializing in sale-leaseback, joint-venture, mortgage and mezzanine financing of need-driven and discretionary senior housing and medical investments. The Company is engaged in the business of owning and financing healthcare properties. Its portfolio consists of lease, mortgage and other note investments in independent living facilities, assisted living facilities, entrance-fee communities, senior living campuses, skilled nursing facilities, specialty hospitals and medical office buildings. Its other investments include marketable securities and a joint venture structured to comply with the provisions of the REIT Investment Diversification Empowerment Act of 2007 (RIDEA) through which it invests in facility operations managed by an independent third party. As of December 31, 2016, it had investments in real estate, mortgage and other notes receivable involving 205 facilities located in 32 states.
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.
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