Earnings

A Side-by-side Analysis of Quality Care Properties, Inc. (QCP) and Physicians Realty Trust (DOC)

Quality Care Properties, Inc. (NYSE:QCP) shares are down more than -2.65% this year and recently decreased -1.82% or -$0.28 to settle at $15.09. Physicians Realty Trust (NYSE:DOC), on the other hand, is down -4.17% year to date as of 11/10/2017. It currently trades at $18.17 and has returned 3.24% during the past week.

Quality Care Properties, Inc. (NYSE:QCP) and Physicians Realty Trust (NYSE:DOC) are the two most active stocks in the REIT – Healthcare Facilities industry based on today’s trading volumes. Investors are clearly interested in the two names, but is one a better choice than the other? We will compare the two companies across growth, profitability, risk, valuation, and insider trends to answer this question.

Growth

The ability to grow earnings at a compound rate over time is a crucial determinant of investment value. Comparatively, DOC is expected to grow at a 9.70% annual rate. All else equal, DOC’s higher growth rate would imply a greater potential for capital appreciation.



Profitability and Returns

Growth doesn’t mean much if it comes at the cost of weak profitability. To adjust for differences in capital structure we’ll use EBITDA margin and Return on Investment (ROI) as measures of profitability and return. EBITDA margin of 47.89% for Physicians Realty Trust (DOC). QCP’s ROI is 1.50% while DOC has a ROI of 1.20%. The interpretation is that QCP’s business generates a higher return on investment than DOC’s.

Cash Flow 




Earnings don’t always accurately reflect the amount of cash that a company brings in. QCP’s free cash flow (“FCF”) per share for the trailing twelve months was +0.34. Comparatively, DOC’s free cash flow per share was -0.01. On a percent-of-sales basis, QCP’s free cash flow was 0.01% while DOC converted -0% of its revenues into cash flow. This means that, for a given level of sales, QCP is able to generate more free cash flow for investors.

Financial Risk

QCP’s debt-to-equity ratio is 0.66 versus a D/E of 0.48 for DOC. QCP is therefore the more solvent of the two companies, and has lower financial risk.

Valuation

QCP trades at a P/B of 0.53, and a P/S of 4.28, compared to a forward P/E of 48.98, a P/B of 1.31, and a P/S of 10.07 for DOC. QCP is the cheaper of the two stocks on an earnings, book value and sales basis. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.

Insider Activity and Investor Sentiment

Short interest, or the percentage of a stock’s tradable shares currently being shorted, is another metric investors use to get a pulse on sentiment.QCP has a short ratio of 4.36 compared to a short interest of 1.82 for DOC. This implies that the market is currently less bearish on the outlook for DOC.

Summary

Quality Care Properties, Inc. (NYSE:QCP) beats Physicians Realty Trust (NYSE:DOC) on a total of 9 of the 13 factors compared between the two stocks. QCP generates a higher return on investment, has higher cash flow per share, has a higher cash conversion rate and higher liquidity. In terms of valuation, QCP is the cheaper of the two stocks on an earnings, book value and sales basis, Finally, SBRA has better sentiment signals based on short interest.

Previous ArticleNext Article

Related Post

Olin Corporation (OLN) vs. Axalta Coating Systems ... Olin Corporation (NYSE:OLN) and Axalta Coating Systems Ltd. (NYSE:AXTA) are the two most active stocks in the Specialty Chemicals industry based on to...
Morgan Stanley (MS) and The Goldman Sachs Group, I... Morgan Stanley (NYSE:MS) shares are up more than 14.51% this year and recently decreased -0.51% or -$0.25 to settle at $48.38. The Goldman Sachs Group...
What the Insider Data Suggests About Nabors Indust... Recent insider trends for Nabors Industries Ltd. (NYSE:NBR) have caught the attention of investors. Analysts study insider data to get a sense of sens...
JA Solar Holdings Co., Ltd. (JASO): More In-Depth ... JA Solar Holdings Co., Ltd. (NASDAQ:JASO) has recently been identified as an interesting stock but more in-depth monitoring is needed for a trade deci...
ZAGG Inc (ZAGG) vs. Barnes & Noble, Inc. (BKS... ZAGG Inc (NASDAQ:ZAGG) and Barnes & Noble, Inc. (NYSE:BKS) are the two most active stocks in the Specialty Retail, Other industry based on today’s...