Reviewing Service Properties Trust (NASDAQ:SVC) and Community Healthcare Trust (NYSE:CHCT)

Community Healthcare Trust (NYSE:CHCT) and Service Properties Trust (NASDAQ:SVC) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, risk, profitability, institutional ownership, earnings and dividends.

Institutional & Insider Ownership

87.8% of Community Healthcare Trust shares are held by institutional investors. Comparatively, 77.6% of Service Properties Trust shares are held by institutional investors. 5.1% of Community Healthcare Trust shares are held by company insiders. Comparatively, 1.4% of Service Properties Trust shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Community Healthcare Trust and Service Properties Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Community Healthcare Trust	-6.27%	-1.66%	-0.76%
Service Properties Trust	-14.83%	-37.94%	-3.97%

Earnings & Valuation

This table compares Community Healthcare Trust and Service Properties Trust”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Community Healthcare Trust	$115.79 million	3.93	-$3.18 million	($0.40)	-39.94
Service Properties Trust	$1.90 billion	0.16	-$275.53 million	($1.67)	-1.05

Community Healthcare Trust has higher earnings, but lower revenue than Service Properties Trust. Community Healthcare Trust is trading at a lower price-to-earnings ratio than Service Properties Trust, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Community Healthcare Trust has a beta of 0.77, meaning that its stock price is 23% less volatile than the S&P 500. Comparatively, Service Properties Trust has a beta of 1.47, meaning that its stock price is 47% more volatile than the S&P 500.

Dividends

Community Healthcare Trust pays an annual dividend of $1.90 per share and has a dividend yield of 11.9%. Service Properties Trust pays an annual dividend of $0.04 per share and has a dividend yield of 2.3%. Community Healthcare Trust pays out -475.0% of its earnings in the form of a dividend. Service Properties Trust pays out -2.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Community Healthcare Trust has raised its dividend for 3 consecutive years. Community Healthcare Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of recent recommendations for Community Healthcare Trust and Service Properties Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Community Healthcare Trust	1	1	2	0	2.25
Service Properties Trust	1	3	0	0	1.75

Community Healthcare Trust currently has a consensus price target of $18.00, indicating a potential upside of 12.66%. Service Properties Trust has a consensus price target of $2.75, indicating a potential upside of 57.14%. Given Service Properties Trust’s higher probable upside, analysts clearly believe Service Properties Trust is more favorable than Community Healthcare Trust.

Summary

Community Healthcare Trust beats Service Properties Trust on 13 of the 17 factors compared between the two stocks.

About Community Healthcare Trust

Community Healthcare Trust Incorporated (the Company”, we”, our”) was organized in the State of Maryland on March 28, 2014. The Company is a fully-integrated healthcare real estate company that owns and acquires real estate properties that are leased to hospitals, doctors, healthcare systems or other healthcare service providers. As of March 31, 2024, the Company had investments of approximately $1.1 billion in 197 real estate properties (including a portion of one property accounted for as a sales-type lease with a gross amount totaling approximately $3.0 million and two properties classified as an asset held for sale with an aggregate amount totaling approximately $7.5 million. The properties are located in 35 states, totaling approximately 4.4 million square feet in the aggregate and were approximately 92.3% leased, excluding real estate assets held for sale, at March 31, 2024 with a weighted average remaining lease term of approximately 6.9 years.

About Service Properties Trust

Service Properties Trust (Nasdaq: SVC) is a real estate investment trust with over $11 billion invested in two asset categories: hotels and service-focused retail net lease properties. As of December 31, 2023, SVC owned 221 hotels with over 37,000 guest rooms throughout the United States and in Puerto Rico and Canada, the majority of which are extended stay and select service. As of December 31, 2023, SVC also owned 752 service-focused retail net lease properties totaling approximately 13.3 million square feet throughout the United States. SVC is managed by The RMR Group (Nasdaq: RMR), a leading U.S. alternative asset management company with over $41 billion in assets under management as of December 31, 2023, and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. SVC is headquartered in Newton, MA.