Sabra Health Care REIT (SBRA) vs. HCP (HCP) Critical Comparison

Sabra Health Care REIT (NASDAQ: SBRA) and HCP (NYSE:HCP) are both mid-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, valuation, institutional ownership, dividends, risk and profitability.

Risk and Volatility

Sabra Health Care REIT has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500. Comparatively, HCP has a beta of 0.38, meaning that its share price is 62% less volatile than the S&P 500.

Valuation & Earnings

This table compares Sabra Health Care REIT and HCP’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sabra Health Care REIT $260.53 million 12.20 $70.27 million $0.94 18.97
HCP $2.13 billion 5.21 $627.74 million $1.11 21.30

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

Dividends

Sabra Health Care REIT pays an annual dividend of $2.08 per share and has a dividend yield of 11.7%. HCP pays an annual dividend of $1.48 per share and has a dividend yield of 6.3%. Sabra Health Care REIT pays out 221.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. HCP pays out 133.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional and Insider Ownership

85.1% of Sabra Health Care REIT shares are held by institutional investors. Comparatively, 89.9% of HCP shares are held by institutional investors. 2.6% of Sabra Health Care REIT shares are held by company insiders. Comparatively, 0.2% of HCP shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Sabra Health Care REIT and HCP, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sabra Health Care REIT 1 6 3 0 2.20
HCP 1 10 4 0 2.20

Sabra Health Care REIT presently has a consensus price target of $24.33, suggesting a potential upside of 36.47%. HCP has a consensus price target of $30.77, suggesting a potential upside of 30.16%. Given Sabra Health Care REIT’s higher probable upside, equities research analysts plainly believe Sabra Health Care REIT is more favorable than HCP.

Profitability

This table compares Sabra Health Care REIT and HCP’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sabra Health Care REIT 25.79% 4.86% 2.33%
HCP 27.31% 8.85% 3.62%

Summary

HCP beats Sabra Health Care REIT on 10 of the 15 factors compared between the two stocks.

Sabra Health Care REIT Company Profile

Sabra Health Care REIT, Inc. is a real estate investment trust. The Company, through its subsidiaries, owns and invests in real estate serving the healthcare industry. The Company’s segment includes investments in healthcare-related real estate properties. The Company’s primary business consists of acquiring, financing and owning real estate property to be leased to third-party tenants in the healthcare sector. As of December 31, 2016, the Company’s investment portfolio consisted of 183 real estate properties held for investment (consisting of 97 skilled nursing/transitional care facilities, 85 senior housing facilities, and one acute care hospital); 10 investments in loans receivable (consisting of four mortgage loans, one construction loan, one mezzanine loan, three pre-development loans and one debtor-in-possession (DIP) loan) and 12 preferred equity investments. It has properties located in New Hampshire, Texas, Florida, Kentucky, Ohio, Maryland and Nebraska, among others.

HCP Company Profile

HCP, Inc. is a self-administered real estate investment trust. The Company invests in real estate serving the healthcare industry in the United States. The Company’s segments include senior housing triple-net (SH NNN), senior housing operating portfolio (SHOP), life science and medical office. Its senior housing facilities include independent living facilities, assisted living facilities, memory care facilities, care homes, and continuing care retirement communities. Its Life science properties contain laboratory and office space for biotechnology, medical device and pharmaceutical companies, scientific research institutions, government agencies and other organizations. Its Medical office buildings contain physicians’ offices and examination rooms, and may include pharmacies, hospital ancillary service space and outpatient services. As of December 31, 2016, it had interests in and managed 15 hospitals, 61 care homes in the United Kingdom and five post-acute/skilled nursing facilities.

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