Sabra Healthcare REIT (NASDAQ:SBRA) versus LTC Properties (NYSE:LTC) Critical Analysis

LTC Properties (NYSE:LTC) and Sabra Healthcare REIT (NASDAQ:SBRA) are both mid-cap real estate companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, institutional ownership, dividends, risk, analyst recommendations, earnings and valuation.

Profitability

This table compares LTC Properties and Sabra Healthcare REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LTC Properties	38.84%	11.42%	6.45%
Sabra Healthcare REIT	7.61%	2.34%	1.18%

Volatility & Risk

LTC Properties has a beta of 0.55, suggesting that its stock price is 45% less volatile than the S&P 500. Comparatively, Sabra Healthcare REIT has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500.

Earnings & Valuation

This table compares LTC Properties and Sabra Healthcare REIT”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LTC Properties	$262.85 million	9.30	$117.97 million	$2.71	16.73
Sabra Healthcare REIT	$774.63 million	6.50	$155.61 million	$0.26	75.85

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

Dividends

LTC Properties pays an annual dividend of $2.28 per share and has a dividend yield of 5.0%. Sabra Healthcare REIT pays an annual dividend of $1.20 per share and has a dividend yield of 6.1%. LTC Properties pays out 84.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sabra Healthcare REIT pays out 461.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of current ratings and price targets for LTC Properties and Sabra Healthcare REIT, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LTC Properties	0	3	5	0	2.62
Sabra Healthcare REIT	0	7	7	0	2.50

LTC Properties currently has a consensus price target of $47.40, indicating a potential upside of 4.57%. Sabra Healthcare REIT has a consensus price target of $21.50, indicating a potential upside of 9.03%. Given Sabra Healthcare REIT’s higher possible upside, analysts clearly believe Sabra Healthcare REIT is more favorable than LTC Properties.

Insider and Institutional Ownership

69.3% of LTC Properties shares are held by institutional investors. Comparatively, 99.4% of Sabra Healthcare REIT shares are held by institutional investors. 2.2% of LTC Properties shares are held by company insiders. Comparatively, 1.1% of Sabra Healthcare REIT shares are held by company 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.

About LTC Properties

LTC Properties, Inc. is a real estate investment trust, which engages in managing seniors housing and health care properties. It operates through the Texas, Michigan, Florida, Wisconsin, Colorado, and Remaining States geographic segments. The company was founded by Andre C. Dimitriadis on May 12, 1992 and is headquartered in Westlake Village, CA.

About Sabra Healthcare 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.