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

Profitability

This table compares Universal Health Realty Income Trust and MedEquities Realty Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Universal Health Realty Income Trust 62.40% 8.23% 3.27%
MedEquities Realty Trust 32.68% 5.58% 3.52%

Dividends

Universal Health Realty Income Trust pays an annual dividend of $2.64 per share and has a dividend yield of 3.6%. MedEquities Realty Trust pays an annual dividend of $0.84 per share and has a dividend yield of 7.2%. Universal Health Realty Income Trust pays out 81.7% 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 pays out 240.0% 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 31 consecutive years. MedEquities Realty Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Universal Health Realty Income Trust and MedEquities Realty Trust, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Universal Health Realty Income Trust 0 0 0 0 N/A
MedEquities Realty Trust 1 1 6 0 2.63

MedEquities Realty Trust has a consensus target price of $13.00, suggesting a potential upside of 10.83%. Given MedEquities Realty Trust’s higher possible upside, analysts clearly believe MedEquities Realty Trust is more favorable than Universal Health Realty Income Trust.

Insider & Institutional Ownership

59.2% of Universal Health Realty Income Trust shares are owned by institutional investors. Comparatively, 92.9% of MedEquities Realty Trust shares are owned by institutional investors. 1.9% of Universal Health Realty Income Trust shares are owned by company insiders. Comparatively, 2.5% of MedEquities Realty Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Universal Health Realty Income Trust and MedEquities Realty Trust’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Universal Health Realty Income Trust $74.03 million 13.65 $51.20 million $3.23 22.99
MedEquities Realty Trust $56.96 million 6.54 $46.67 million $0.35 33.51

Universal Health Realty Income Trust has higher revenue and earnings than MedEquities Realty Trust. Universal Health Realty Income Trust is trading at a lower price-to-earnings ratio than MedEquities Realty Trust, indicating that it is currently the more affordable of the two stocks.

Summary

Universal Health Realty Income Trust beats MedEquities Realty Trust on 8 of the 15 factors compared between the two stocks.

About Universal Health Realty Income Trust

Universal Health Realty Income Trust is a real estate investment trust (REIT). The Company invests in healthcare and human service related facilities, including acute care hospitals, rehabilitation hospitals, sub-acute facilities, surgery centers, free-standing emergency departments, childcare centers and medical office buildings (MOBs). As of February 28, 2017, the Company had 67 real estate investments located in 20 states in the United States consisting of six hospital facilities, including three acute care, one rehabilitation and two sub-acute; 54 MOBs; three free-standing emergency departments (FEDs), and four preschool and childcare centers. The Company’s facilities include Southwest Healthcare System, Inland Valley Campus, Wellington Regional Medical Center, Kindred Hospital Chicago Central, Vibra Hospital of Corpus Christi, Chesterbrook Academy, and Desert Valley Medical Center.

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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