Critical Review: National Health Investors (NHI) and Colony Capital (CLNY)

National Health Investors (NYSE:NHI) and Colony Capital (NYSE:CLNY) are both mid-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Institutional and Insider Ownership

69.1% of National Health Investors shares are held by institutional investors. Comparatively, 81.1% of Colony Capital shares are held by institutional investors. 5.6% of National Health Investors shares are held by insiders. Comparatively, 7.8% of Colony Capital shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares National Health Investors and Colony Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
National Health Investors 53.15% 11.56% 5.94%
Colony Capital -17.64% -4.75% -2.07%

Valuation & Earnings

This table compares National Health Investors and Colony Capital’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
National Health Investors $278.66 million 11.82 $159.36 million $5.33 14.64
Colony Capital $2.80 billion 0.97 -$197.89 million N/A N/A

National Health Investors has higher earnings, but lower revenue than Colony Capital.

Dividends

National Health Investors pays an annual dividend of $4.00 per share and has a dividend yield of 5.1%. Colony Capital pays an annual dividend of $0.44 per share and has a dividend yield of 8.0%. National Health Investors pays out 75.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. National Health Investors has increased its dividend for 9 consecutive years and Colony Capital has increased its dividend for 9 consecutive years.

Volatility and Risk

National Health Investors has a beta of 0.35, suggesting that its stock price is 65% less volatile than the S&P 500. Comparatively, Colony Capital has a beta of 1.36, suggesting that its stock price is 36% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations for National Health Investors and Colony Capital, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
National Health Investors 1 5 4 0 2.30
Colony Capital 0 0 1 0 3.00

National Health Investors currently has a consensus price target of $75.13, suggesting a potential downside of 3.70%. Colony Capital has a consensus price target of $9.00, suggesting a potential upside of 63.04%. Given Colony Capital’s stronger consensus rating and higher possible upside, analysts clearly believe Colony Capital is more favorable than National Health Investors.

Summary

Colony Capital beats National Health Investors on 8 of the 15 factors compared between the two stocks.

National Health Investors Company Profile

Incorporated in 1991, National Health Investors, Inc. (NYSE: NHI) is a real estate investment trust specializing in sale-leaseback, joint-venture, mortgage and mezzanine financing of need-driven and discretionary senior housing and medical investments. NHI's portfolio consists of independent, assisted and memory care communities, entrance-fee retirement communities, skilled nursing facilities, medical office buildings and specialty hospitals.

Colony Capital Company Profile

Colony Capital, Inc. (NYSE: CLNY) is a leading global investment management firm with assets under management of $44 billion. The Company manages capital on behalf of its stockholders, as well as institutional and retail investors in private funds, non-traded and traded real estate investment trusts and registered investment companies. The Company has significant holdings in: (a) the healthcare, industrial and hospitality property sectors; (b) Colony Credit Real Estate, Inc. (NYSE: CLNC) and NorthStar Realty Europe Corp. (NYSE: NRE), which are both externally managed by subsidiaries of the Company; and (c) various other equity and debt investments. The Company is headquartered in Los Angeles with key offices in New York, Paris and London, and has over 400 employees across 17 locations in ten countries.

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