Critical Contrast: Care Capital Properties (CCP) and Medical Properties Trust (MPW)

Care Capital Properties (NYSE: CCP) and Medical Properties Trust (NYSE:MPW) are both mid-cap healthcare reits companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, valuation, earnings, profitability, analyst recommendations, dividends and institutional ownership.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Care Capital Properties and Medical Properties Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Care Capital Properties 0 3 0 0 2.00
Medical Properties Trust 2 4 6 0 2.33

Care Capital Properties presently has a consensus target price of $22.50, indicating a potential downside of 7.06%. Medical Properties Trust has a consensus target price of $14.10, indicating a potential upside of 2.32%. Given Medical Properties Trust’s stronger consensus rating and higher possible upside, analysts clearly believe Medical Properties Trust is more favorable than Care Capital Properties.

Dividends

Care Capital Properties pays an annual dividend of $2.28 per share and has a dividend yield of 9.4%. Medical Properties Trust pays an annual dividend of $0.96 per share and has a dividend yield of 7.0%. Care Capital Properties pays out 78.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Medical Properties Trust pays out 126.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Medical Properties Trust has raised its dividend for 3 consecutive years. Care Capital Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Care Capital Properties and Medical Properties Trust’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Care Capital Properties N/A N/A N/A $2.90 8.35
Medical Properties Trust $541.14 million 9.27 $225.04 million $0.76 18.13

Medical Properties Trust has higher revenue and earnings than Care Capital Properties. Care Capital Properties is trading at a lower price-to-earnings ratio than Medical Properties Trust, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Care Capital Properties and Medical Properties Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Care Capital Properties 109.47% 40.07% 16.26%
Medical Properties Trust 39.95% 7.36% 3.54%

Insider and Institutional Ownership

88.9% of Care Capital Properties shares are held by institutional investors. Comparatively, 84.7% of Medical Properties Trust shares are held by institutional investors. 1.7% of Care Capital Properties shares are held by company insiders. Comparatively, 1.0% of Medical Properties Trust shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Care Capital Properties beats Medical Properties Trust on 8 of the 13 factors compared between the two stocks.

About Care Capital Properties

Care Capital Properties, Inc. is a self-administered, self-managed real estate investment trust with a diversified portfolio of skilled nursing facilities (SNFs) and other healthcare assets operated by private regional and local care providers. The Company leases its properties to unaffiliated tenants under long-term triple-net leases, pursuant to which the tenants are obligated to pay all property-related expenses, including maintenance, utilities, repairs and taxes. It also manages a small portfolio of secured and unsecured loans, made primarily to its SNF operators and other post-acute care providers. As of December 31, 2016, its portfolio consisted of 345 properties operated by 38 private regional and local care providers, spread across 36 states and containing a total of approximately 38,000 beds/units. It conducts all of its operations through its operating partnership, Care Capital Properties, LP, and its subsidiaries.

About Medical Properties Trust

Medical Properties Trust, Inc. is a real estate investment trust (REIT). The Company focuses on investing in and owning net-leased healthcare facilities across the United States and selectively in foreign jurisdictions. The Company’s segment is its investments in healthcare real estate, including mortgage and other loans, as well as any equity investments in its tenants. The Company conducts its operations through MPT Operating Partnership, L.P. The Company acquires and develops healthcare facilities, and leases the facilities to healthcare operating companies under long-term net leases. The Company makes mortgage loans to healthcare operators collateralized by their real estate assets. As of February 24, 2017, the Company’s portfolio consisted of 232 properties, including 215 facilities (of the 220 facilities that it owns) were leased to 30 tenants, five were under development, and the remaining assets were in the form of mortgage loans to four operators.

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