Ventas (NYSE:VTR) and DiamondRock Hospitality (NYSE:DRH) Critical Analysis

Ventas (NYSE:VTR) and DiamondRock Hospitality (NYSE:DRH) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, valuation, profitability, risk, dividends, earnings and institutional ownership.

Risk & Volatility

Ventas has a beta of 0.74, meaning that its share price is 26% less volatile than the S&P 500. Comparatively, DiamondRock Hospitality has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500.

Earnings and Valuation

This table compares Ventas and DiamondRock Hospitality”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ventas	$5.83 billion	7.29	$251.38 million	$0.55	159.04
DiamondRock Hospitality	$1.12 billion	1.87	$48.05 million	$0.47	21.91

Ventas has higher revenue and earnings than DiamondRock Hospitality. DiamondRock Hospitality is trading at a lower price-to-earnings ratio than Ventas, indicating that it is currently the more affordable of the two stocks.

Dividends

Ventas pays an annual dividend of $2.08 per share and has a dividend yield of 2.4%. DiamondRock Hospitality pays an annual dividend of $0.36 per share and has a dividend yield of 3.5%. Ventas pays out 378.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. DiamondRock Hospitality pays out 76.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ventas has increased its dividend for 1 consecutive years and DiamondRock Hospitality has increased its dividend for 1 consecutive years. DiamondRock Hospitality is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

94.2% of Ventas shares are held by institutional investors. 0.5% of Ventas shares are held by company insiders. Comparatively, 0.9% of DiamondRock Hospitality shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Ventas and DiamondRock Hospitality’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ventas	4.25%	2.09%	0.96%
DiamondRock Hospitality	5.69%	4.04%	2.05%

Analyst Ratings

This is a summary of current ratings and price targets for Ventas and DiamondRock Hospitality, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ventas	0	3	14	0	2.82
DiamondRock Hospitality	0	7	3	0	2.30

Ventas presently has a consensus target price of $94.00, indicating a potential upside of 7.46%. DiamondRock Hospitality has a consensus target price of $10.87, indicating a potential upside of 5.56%. Given Ventas’ stronger consensus rating and higher possible upside, analysts plainly believe Ventas is more favorable than DiamondRock Hospitality.

Summary

Ventas beats DiamondRock Hospitality on 9 of the 16 factors compared between the two stocks.

About Ventas

Ventas Inc. (NYSE: VTR) is a leading S&P 500 real estate investment trust focused on delivering strong, sustainable shareholder returns by enabling exceptional environments that benefit a large and growing aging population. The Company's growth is fueled by its senior housing communities, which provide valuable services to residents and enable them to thrive in supported environments. Ventas leverages its unmatched operational expertise, data-driven insights from its Ventas Operational InsightsTM platform, extensive relationships and strong financial position to achieve its goal of delivering outsized performance across approximately 1,400 properties. The Ventas portfolio is composed of senior housing communities, outpatient medical buildings, research centers and healthcare facilities in North America and the United Kingdom. The Company benefits from a seasoned team of talented professionals who share a commitment to excellence, integrity and a common purpose of helping people live longer, healthier, happier lives.

About DiamondRock Hospitality

DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of a leading portfolio of geographically diversified hotels concentrated in leisure destinations and top gateway markets. The Company currently owns 36 premium quality hotels with over 9,700 rooms. The Company has strategically positioned its portfolio to be operated both under leading global brand families as well as independent boutique hotels in the lifestyle segment.