Reviewing Omega Healthcare Investors (OHI) and HCP (HCP)
Omega Healthcare Investors (NYSE: OHI) and HCP (NYSE:HCP) are both mid-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, profitability, dividends, risk and analyst recommendations.
Institutional & Insider Ownership
72.8% of Omega Healthcare Investors shares are held by institutional investors. Comparatively, 89.6% of HCP shares are held by institutional investors. 1.5% of Omega Healthcare Investors shares are held by insiders. Comparatively, 0.2% of HCP shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
This table compares Omega Healthcare Investors and HCP’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Omega Healthcare Investors||40.20%||8.88%||4.17%|
Omega Healthcare Investors pays an annual dividend of $2.56 per share and has a dividend yield of 8.1%. HCP pays an annual dividend of $1.48 per share and has a dividend yield of 5.5%. Omega Healthcare Investors pays out 135.5% 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 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. HCP has raised its dividend for 7 consecutive years.
Earnings & Valuation
This table compares Omega Healthcare Investors and HCP’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Omega Healthcare Investors||$926.66 million||6.73||$853.50 million||$1.89||16.73|
|HCP||$2.02 billion||6.28||$1.17 billion||$1.45||18.66|
HCP has higher revenue and earnings than Omega Healthcare Investors. Omega Healthcare Investors is trading at a lower price-to-earnings ratio than HCP, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current ratings and recommmendations for Omega Healthcare Investors and HCP, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Omega Healthcare Investors||0||2||0||0||2.00|
Omega Healthcare Investors presently has a consensus price target of $31.50, indicating a potential downside of 0.38%. HCP has a consensus price target of $31.83, indicating a potential upside of 17.64%. Given HCP’s higher probable upside, analysts plainly believe HCP is more favorable than Omega Healthcare Investors.
Volatility and Risk
Omega Healthcare Investors has a beta of 0.53, meaning that its stock price is 47% less volatile than the S&P 500. Comparatively, HCP has a beta of 0.38, meaning that its stock price is 62% less volatile than the S&P 500.
HCP beats Omega Healthcare Investors on 10 of the 16 factors compared between the two stocks.
About Omega Healthcare Investors
Omega Healthcare Investors, Inc. is a self-administered real estate investment trust (REIT). The Company maintains a portfolio of long-term healthcare facilities and mortgages on healthcare facilities located in the United States and the United Kingdom. It operates through the segment, which consists of investments in healthcare-related real estate properties. It provides lease or mortgage financing to qualified operators of skilled nursing facilities (SNFs) and assisted living facilities (ALFs), independent living facilities, rehabilitation and acute care facilities. Its portfolio consists of long-term leases and mortgage agreements. As of December 31, 2016, its portfolio of investments included 996 healthcare facilities located in 42 states and the United Kingdom and operated by 79 third-party operators. As of December 31, 2016, the Company’s portfolio consisted of 809 SNFs, 101 ALFs, 16 specialty facilities, one medical office building, fixed rate mortgages on 44 SNFs and two ALFs.
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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