LTC Properties (NYSE: LTC) and MedEquities Realty Trust (NYSE:MRT) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, dividends, profitabiliy, valuation and analyst recommendations.

Institutional and Insider Ownership

83.4% of LTC Properties shares are held by institutional investors. Comparatively, 95.7% of MedEquities Realty Trust shares are held by institutional investors. 1.7% of LTC Properties shares are held by insiders. Comparatively, 2.5% of MedEquities Realty Trust shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations for LTC Properties and MedEquities Realty Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LTC Properties 0 6 2 0 2.25
MedEquities Realty Trust 1 1 5 0 2.57

LTC Properties presently has a consensus target price of $52.67, suggesting a potential upside of 4.56%. MedEquities Realty Trust has a consensus target price of $12.86, suggesting a potential upside of 3.94%. Given LTC Properties’ higher probable upside, equities research analysts clearly believe LTC Properties is more favorable than MedEquities Realty Trust.

Profitability

This table compares LTC Properties and MedEquities Realty Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LTC Properties 52.17% 11.66% 6.24%
MedEquities Realty Trust 26.72% 3.27% 1.94%

Dividends

LTC Properties pays an annual dividend of $2.28 per share and has a dividend yield of 4.5%. MedEquities Realty Trust pays an annual dividend of $0.84 per share and has a dividend yield of 6.8%. LTC Properties pays out 102.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MedEquities Realty Trust has increased its dividend for 5 consecutive years. MedEquities Realty Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares LTC Properties and MedEquities Realty Trust’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
LTC Properties $165.48 million 12.05 $147.17 million $2.22 22.69
MedEquities Realty Trust $48.73 million 8.07 $39.04 million N/A N/A

LTC Properties has higher revenue and earnings than MedEquities Realty Trust.

About LTC Properties

LTC Properties Inc. is a healthcare real estate investment trust (REIT). The Company invests in senior housing and healthcare properties through sale-leaseback transactions, mortgage financing and structured finance solutions, including mezzanine lending. It invests in various properties, including Skilled nursing facilities (SNF), Assisted living facilities (ALF), Independent living facilities (ILF), Memory care facilities (MC) and Range of care facilities (ROC). SNF provides restorative, rehabilitative and nursing care. Many skilled nursing facilities provide ancillary services that include occupational, speech, physical, respiratory and IV therapies, as well as sub-acute care services, which are paid either by the patient, the patient’s family, private health insurance, or through the federal Medicare or state Medicaid programs. ALF serves people requiring assistance with activities of daily living, but do not require the constant supervision skilled nursing facilities provide.

About MedEquities Realty Trust

MedEquities Realty Trust, Inc. is a real estate investment trust (REIT). The Company invests in a diversified mix of healthcare properties and healthcare-related real estate debt investments. The Company invests primarily in real estate across the acute and post-acute spectrum of care. It focuses on investing in various types of healthcare properties, including acute care hospitals; skilled nursing facilities; short-stay surgical and specialty hospitals, which focus on orthopedic, heart and other dedicated surgeries and specialty procedures; dedicated specialty hospitals, such as inpatient rehabilitation facilities, long-term acute care hospitals and facilities providing psychiatric care; physician clinics; diagnostic facilities; outpatient surgery centers, and facilities that support these services, such as medical office buildings. As of September 30, 2016, the Company’s portfolio included 24 healthcare facilities and one healthcare-related debt investment.

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