Threats:
–Rising Interest Rates: Ventas, Inc. (NYSE:VTR) consistently has utilized the record low interest rates to take out loans to fund expansion plans and acquisitions, however any rise in these rates could hinder the company’s growth prospects and threaten business
Competitors:
Major publicly traded competitors of Ventas include Health Care REIT, Inc. (NYSE:HCN), HCP, Inc. (NYSE:HCP), Brookdale Senior Living, Inc. (NYSE:BKD), and Senior Housing Properties Trust (NYSE:SNH). All of these companies operate in the health care real estate industry and compete directly against Ventas.
Health Care is valued at $18.05 billion, pays out a dividend yielding 4.88%, and carries a price to earnings ratio of 254.36. Health Care possesses a price to book ratio of 1.89. Fundamentally, the company’s business model is profitable, with a TTM profit margin of 15.29%. Into the future, Health Care is anticipated to grow revenue and earnings in the low-single digit range.
HCP is valued at $19.09 billion, pays out a dividend yielding 5.00%, and carries a price to earnings ratio of 21.56. HCP possesses a price to book ratio of 1.97. Fundamentally, the company’s business model is extremely solid, with a TTM profit margin of 44.29%. Flat line growth is projected through 2015 for the company in terms of revenue.
Brookdale is valued at $3.26 billion, does not pay out a dividend, and carries a negative price to earnings ratio. Brookdale presently carries a price to book ratio of 3.47. Fundamentally, the company’s business model is weak, with a TTM profit margin of -1.85%. In respect to revenue, the company is projected to sustain steady low single digit growth into the future.
Senior Housing is valued at $4.62 billion, pays out a dividend yielding 6.35%, and carries a price to earnings ratio of 30.91. The company possesses a price to book ratio of 1.74. Fundamentally, Senior Housing’s business model is strong, with a TTM profit margin of 20.13%. Looking into the future, Senior Housing is anticipated to experience choppy revenue growth into 2015.
The Foolish Bottom Line:
Financially, Ventas, Inc. (NYSE:VTR) is extremely solid with disregard to its rather substantial debt position. The company possesses stable revenue growth, a growing dividend, and a diversified portfolio of properties. The company’s weaknesses include its high valuation and large exposure to rising interest rates. Looking forward, the company is likely to derive growth from investments it makes into increasing its property count. All in all, Ventas possesses an extremely predictable and stable business model, and should provide investors with solid and stable returns for years to come, however investors should wait for interest rates to stabilize before investing.
The article Why Not Only Old-Timers Should Be Interested In This Specialty REIT originally appeared on Fool.com.
Ryan Guenette has no position in any stocks mentioned. The Motley Fool recommends Health Care REIT. Ryan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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