Omega Healthcare Investors (NYSE:OHI) & CareTrust REIT (NYSE:CTRE) Critical Analysis

CareTrust REIT (NYSE:CTRE) and Omega Healthcare Investors (NYSE:OHI) are both real estate companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, dividends, risk, profitability, analyst recommendations and institutional ownership.

Insider and Institutional Ownership

87.8% of CareTrust REIT shares are held by institutional investors. Comparatively, 65.2% of Omega Healthcare Investors shares are held by institutional investors. 0.7% of CareTrust REIT shares are held by company insiders. Comparatively, 1.7% of Omega Healthcare Investors shares are held by company 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.

Dividends

CareTrust REIT pays an annual dividend of $1.56 per share and has a dividend yield of 4.3%. Omega Healthcare Investors pays an annual dividend of $2.72 per share and has a dividend yield of 5.8%. CareTrust REIT pays out 98.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Omega Healthcare Investors pays out 97.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CareTrust REIT has increased its dividend for 3 consecutive years. Omega Healthcare Investors is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

CareTrust REIT has a beta of 0.77, indicating that its stock price is 23% less volatile than the S&P 500. Comparatively, Omega Healthcare Investors has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and price targets for CareTrust REIT and Omega Healthcare Investors, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CareTrust REIT	0	4	10	1	2.80
Omega Healthcare Investors	2	7	7	0	2.31

CareTrust REIT presently has a consensus target price of $43.64, indicating a potential upside of 19.93%. Omega Healthcare Investors has a consensus target price of $49.93, indicating a potential upside of 6.26%. Given CareTrust REIT’s stronger consensus rating and higher probable upside, analysts plainly believe CareTrust REIT is more favorable than Omega Healthcare Investors.

Profitability

This table compares CareTrust REIT and Omega Healthcare Investors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CareTrust REIT	62.19%	8.52%	6.64%
Omega Healthcare Investors	66.96%	15.76%	8.40%

Earnings and Valuation

This table compares CareTrust REIT and Omega Healthcare Investors”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CareTrust REIT	$476.39 million	18.05	$320.54 million	$1.59	22.89
Omega Healthcare Investors	$1.19 billion	11.96	$572.03 million	$2.80	16.78

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

About CareTrust REIT

CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition, development and leasing of skilled nursing, seniors housing and other healthcare-related properties. With a nationwide portfolio of long-term net-leased properties, and a growing portfolio of quality operators leasing them, CareTrust REIT is pursuing both external and organic growth opportunities across the United States.

About Omega Healthcare Investors

Omega Healthcare Investors, Inc. engages in the provision of financing and capital to the long-term healthcare industry with a particular focus on skilled nursing facilities, assisted living facilities, independent living facilities, rehabilitation and acute care facilities, and medical office buildings. The company was founded on March 31, 1992 and is headquartered in Hunt Valley, MD.