Critical Analysis: Sabra Health Care REIT (NASDAQ:SBRA) versus Net Lease Office Properties (NYSE:NLOP)

Net Lease Office Properties (NYSE:NLOP) and Sabra Health Care REIT (NASDAQ:SBRA) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, earnings, analyst recommendations, risk, institutional ownership and dividends.

Volatility & Risk

Net Lease Office Properties has a beta of 0.96, indicating that its stock price is 4% less volatile than the S&P 500. Comparatively, Sabra Health Care REIT has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500.

Earnings & Valuation

This table compares Net Lease Office Properties and Sabra Health Care REIT”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Net Lease Office Properties	$142.25 million	3.15	-$131.75 million	($6.19)	-4.88
Sabra Health Care REIT	$703.24 million	6.04	$13.76 million	$0.53	33.68

Sabra Health Care REIT has higher revenue and earnings than Net Lease Office Properties. Net Lease Office Properties is trading at a lower price-to-earnings ratio than Sabra Health Care REIT, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

58.3% of Net Lease Office Properties shares are owned by institutional investors. Comparatively, 99.4% of Sabra Health Care REIT shares are owned by institutional investors. 1.1% of Sabra Health Care REIT shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Net Lease Office Properties and Sabra Health Care REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Net Lease Office Properties	-122.90%	-30.16%	-17.58%
Sabra Health Care REIT	18.02%	4.60%	2.37%

Analyst Ratings

This is a summary of current recommendations and price targets for Net Lease Office Properties and Sabra Health Care REIT, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Net Lease Office Properties	0	0	1	0	3.00
Sabra Health Care REIT	0	3	3	1	2.71

Net Lease Office Properties currently has a consensus target price of $46.00, indicating a potential upside of 52.22%. Sabra Health Care REIT has a consensus target price of $19.33, indicating a potential upside of 8.31%. Given Net Lease Office Properties’ stronger consensus rating and higher probable upside, research analysts clearly believe Net Lease Office Properties is more favorable than Sabra Health Care REIT.

Dividends

Net Lease Office Properties pays an annual dividend of $0.34 per share and has a dividend yield of 1.1%. Sabra Health Care REIT pays an annual dividend of $1.20 per share and has a dividend yield of 6.7%. Net Lease Office Properties pays out -5.5% of its earnings in the form of a dividend. Sabra Health Care REIT pays out 226.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Sabra Health Care REIT beats Net Lease Office Properties on 13 of the 17 factors compared between the two stocks.

About Net Lease Office Properties

Net Lease Office Properties (NYSE: NLOP) is a publicly traded real estate investment trust with a portfolio of 59 high-quality office properties, totaling approximately 8.7 million leasable square feet primarily leased to corporate tenants on a single-tenant net lease basis. The vast majority of the office properties owned by NLOP are located in the U.S., with the balance in Europe. The portfolio consists of 62 corporate tenants operating in a variety of industries, generating annualized based rent (ABR) of approximately $145 million. NLOP's business plan is to focus on realizing value for its shareholders primarily through strategic asset management and disposition of its property portfolio over time. Given WPC's extensive knowledge of the portfolio, NLOP is externally managed and advised by wholly owned affiliates of WPC to successfully execute on its business strategy. Over the course of its 50-year history, WPC has developed significant expertise in the single-tenant office real estate sector, including the operation, leasing, acquisition and development of assets through many market cycles, and has a proven track record of execution.

About Sabra Health Care REIT

Sabra Health Care REIT, Inc. engages in the business of acquiring, financing, and owning real estate property. The company was founded on May 10, 2010 and is headquartered in Tustin, CA.