Weyerhaeuser (NYSE:WY) vs. HCP (NYSE:HCP) Critical Analysis

Weyerhaeuser (NYSE:WY) and HCP (NYSE:HCP) are both large-cap construction companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, institutional ownership, risk, valuation and dividends.

Profitability

This table compares Weyerhaeuser and HCP’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Weyerhaeuser 2.62% 7.69% 3.99%
HCP 59.96% 18.05% 8.29%

Analyst Ratings

This is a summary of current recommendations and price targets for Weyerhaeuser and HCP, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Weyerhaeuser 0 2 8 0 2.80
HCP 0 3 10 0 2.77

Weyerhaeuser presently has a consensus price target of $32.67, indicating a potential upside of 27.90%. HCP has a consensus price target of $30.41, indicating a potential downside of 6.63%. Given Weyerhaeuser’s stronger consensus rating and higher possible upside, analysts plainly believe Weyerhaeuser is more favorable than HCP.

Risk and Volatility

Weyerhaeuser has a beta of 1.72, indicating that its stock price is 72% more volatile than the S&P 500. Comparatively, HCP has a beta of 0.31, indicating that its stock price is 69% less volatile than the S&P 500.

Insider and Institutional Ownership

76.3% of Weyerhaeuser shares are held by institutional investors. Comparatively, 95.5% of HCP shares are held by institutional investors. 0.4% of Weyerhaeuser shares are held by insiders. Comparatively, 0.1% of HCP shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

Weyerhaeuser pays an annual dividend of $1.36 per share and has a dividend yield of 5.3%. HCP pays an annual dividend of $1.48 per share and has a dividend yield of 4.5%. Weyerhaeuser pays out 115.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. HCP pays out 81.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Weyerhaeuser has raised its dividend for 7 consecutive years. Weyerhaeuser is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Weyerhaeuser and HCP’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Weyerhaeuser $7.48 billion 2.54 $748.00 million $1.18 21.64
HCP $1.85 billion 8.43 $1.06 billion $1.82 17.90

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

Summary

HCP beats Weyerhaeuser on 9 of the 17 factors compared between the two stocks.

About Weyerhaeuser

Weyerhaeuser Company, one of the world's largest private owners of timberlands, began operations in 1900. We own or control 12.2 million acres of timberlands in the U.S., and manage additional timberlands under long-term licenses in Canada. We manage these timberlands on a sustainable basis in compliance with internationally recognized forestry standards. We are also one of the largest manufacturers of wood products. Our company is a real estate investment trust. In 2018, we generated $7.5 billion in net sales and employed approximately 9,300 people who serve customers worldwide. We are listed on the Dow Jones Sustainability North America Index. Our common stock trades on the New York Stock Exchange under the symbol WY.

About HCP

HCP, Inc. is a fully integrated real estate investment trust (REIT) that invests in real estate serving the healthcare industry in the United States. HCP owns a large-scale portfolio primarily diversified across life science, medical office and senior housing. Recognized as a global leader in sustainability, HCP has been a publicly-traded company since 1985 and was the first healthcare REIT selected to the S&P 500 index.

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