Analyzing HCP (HCP) & Welltower (HCN)
HCP (NYSE: HCP) and Welltower (NYSE:HCN) are both large-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, institutional ownership, profitability, analyst recommendations, earnings, dividends and risk.
This is a summary of current ratings and price targets for HCP and Welltower, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
HCP presently has a consensus target price of $32.69, indicating a potential upside of 9.71%. Welltower has a consensus target price of $72.58, indicating a potential upside of 1.16%. Given HCP’s higher probable upside, equities research analysts plainly believe HCP is more favorable than Welltower.
Institutional and Insider Ownership
88.9% of HCP shares are owned by institutional investors. Comparatively, 85.2% of Welltower shares are owned by institutional investors. 0.2% of HCP shares are owned by insiders. Comparatively, 0.2% of Welltower shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Volatility & Risk
HCP has a beta of 0.37, meaning that its stock price is 63% less volatile than the S&P 500. Comparatively, Welltower has a beta of 0.23, meaning that its stock price is 77% less volatile than the S&P 500.
Earnings and Valuation
This table compares HCP and Welltower’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|HCP||$2.02 billion||6.92||$1.17 billion||$1.45||20.55|
|Welltower||$4.19 billion||6.32||$2.05 billion||$3.21||22.35|
Welltower has higher revenue and earnings than HCP. HCP is trading at a lower price-to-earnings ratio than Welltower, indicating that it is currently the more affordable of the two stocks.
HCP pays an annual dividend of $1.48 per share and has a dividend yield of 5.0%. Welltower pays an annual dividend of $3.48 per share and has a dividend yield of 4.9%. HCP pays out 102.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Welltower pays out 108.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. HCP has raised its dividend for 7 consecutive years. HCP is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares HCP and Welltower’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
HCP beats Welltower on 10 of the 17 factors compared between the two stocks.
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.
Welltower Inc. invests with seniors housing operators, post-acute providers and health systems to fund real estate and infrastructure. The Company invests in seniors housing and healthcare real estate. It operates in three segments: triple-net, seniors housing operating and outpatient medical. Welltower, a real estate investment trust (REIT), owns interests in properties concentrated in markets in the United States, Canada and the United Kingdom, consisting of seniors housing and post-acute communities, and outpatient medical properties. Its triple-net properties include independent living facilities, independent supportive living facilities (Canada), continuing care retirement communities, assisted living facilities, care homes with and without nursing (the United Kingdom), Alzheimer’s/dementia care facilities, long-term/post-acute care facilities and hospitals. Its outpatient medical properties include outpatient medical buildings.
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