Care Capital Properties (NYSE:CCP) & HCP (HCP) Critical Analysis

HCP (NYSE: HCP) and Care Capital Properties (NYSE:CCP) are both mid-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, risk, profitability and dividends.

Insider and Institutional Ownership

90.2% of HCP shares are held by institutional investors. Comparatively, 88.9% of Care Capital Properties shares are held by institutional investors. 0.2% of HCP shares are held by company insiders. Comparatively, 1.7% of Care Capital Properties 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.

Earnings and Valuation

This table compares HCP and Care Capital Properties’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HCP $2.13 billion 5.90 $627.74 million $1.11 24.13
Care Capital Properties N/A N/A N/A $2.90 8.35

HCP has higher revenue and earnings than Care Capital Properties. Care Capital Properties is trading at a lower price-to-earnings ratio than HCP, indicating that it is currently the more affordable of the two stocks.

Dividends

HCP pays an annual dividend of $1.48 per share and has a dividend yield of 5.5%. Care Capital Properties pays an annual dividend of $2.28 per share and has a dividend yield of 9.4%. HCP pays out 133.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Care Capital Properties pays out 78.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Care Capital Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of recent ratings and target prices for HCP and Care Capital Properties, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HCP 1 10 3 0 2.14
Care Capital Properties 0 3 0 0 2.00

HCP presently has a consensus price target of $31.42, indicating a potential upside of 17.31%. Care Capital Properties has a consensus price target of $22.50, indicating a potential downside of 7.06%. Given HCP’s stronger consensus rating and higher probable upside, equities analysts plainly believe HCP is more favorable than Care Capital Properties.

Profitability

This table compares HCP and Care Capital Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HCP 27.31% 8.85% 3.62%
Care Capital Properties 109.47% 40.07% 16.26%

Summary

Care Capital Properties beats HCP on 7 of the 12 factors compared between the two stocks.

About HCP

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.

About Care Capital Properties

Care Capital Properties, Inc. is a self-administered, self-managed real estate investment trust with a diversified portfolio of skilled nursing facilities (SNFs) and other healthcare assets operated by private regional and local care providers. The Company leases its properties to unaffiliated tenants under long-term triple-net leases, pursuant to which the tenants are obligated to pay all property-related expenses, including maintenance, utilities, repairs and taxes. It also manages a small portfolio of secured and unsecured loans, made primarily to its SNF operators and other post-acute care providers. As of December 31, 2016, its portfolio consisted of 345 properties operated by 38 private regional and local care providers, spread across 36 states and containing a total of approximately 38,000 beds/units. It conducts all of its operations through its operating partnership, Care Capital Properties, LP, and its subsidiaries.

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