Vornado Realty Trust (NYSE:VNO) and CareTrust REIT (NASDAQ:CTRE) are both mid-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, risk, valuation, institutional ownership, earnings, analyst recommendations and profitability.
Institutional and Insider Ownership
73.7% of Vornado Realty Trust shares are owned by institutional investors. Comparatively, 87.6% of CareTrust REIT shares are owned by institutional investors. 8.3% of Vornado Realty Trust shares are owned by insiders. Comparatively, 1.4% of CareTrust REIT shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Dividends
Vornado Realty Trust pays an annual dividend of $2.12 per share and has a dividend yield of 4.9%. CareTrust REIT pays an annual dividend of $1.00 per share and has a dividend yield of 4.4%. Vornado Realty Trust pays out 60.7% of its earnings in the form of a dividend. CareTrust REIT pays out 73.5% 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. Vornado Realty Trust has increased its dividend for 1 consecutive years and CareTrust REIT has increased its dividend for 5 consecutive years. Vornado Realty Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.
Analyst Recommendations
This is a breakdown of current ratings and recommmendations for Vornado Realty Trust and CareTrust REIT, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Vornado Realty Trust | 4 | 5 | 2 | 0 | 1.82 |
CareTrust REIT | 0 | 1 | 7 | 1 | 3.00 |
Vornado Realty Trust presently has a consensus target price of $38.50, indicating a potential downside of 12.62%. CareTrust REIT has a consensus target price of $23.00, indicating a potential upside of 1.14%. Given CareTrust REIT's stronger consensus rating and higher probable upside, analysts clearly believe CareTrust REIT is more favorable than Vornado Realty Trust.
Valuation & Earnings
This table compares Vornado Realty Trust and CareTrust REIT's revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Vornado Realty Trust | $1.92 billion | 4.34 | $3.15 billion | $3.49 | 12.52 |
CareTrust REIT | $163.40 million | 13.35 | $46.36 million | $1.36 | 16.72 |
Vornado Realty Trust has higher revenue and earnings than CareTrust REIT. Vornado Realty Trust is trading at a lower price-to-earnings ratio than CareTrust REIT, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Vornado Realty Trust has a beta of 1.48, meaning that its share price is 48% more volatile than the S&P 500. Comparatively, CareTrust REIT has a beta of 1.11, meaning that its share price is 11% more volatile than the S&P 500.
Profitability
This table compares Vornado Realty Trust and CareTrust REIT's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Vornado Realty Trust | 6.43% | 2.31% | 0.80% |
CareTrust REIT | 45.10% | 8.74% | 5.41% |
Summary
CareTrust REIT beats Vornado Realty Trust on 10 of the 18 factors compared between the two stocks.