As of July 20, 2023, Ventas Inc (VTR, Financial) is witnessing a 3.07% increase in its stock price, now valued at $49.69 per share. This healthcare real estate investment trust (REIT) has a market cap of $19.9 billion and reported sales of $4.2 billion. The GuruFocus valuation method reveals a 'GF Value' of $51.79, suggesting that Ventas (VTR) is fairly valued.
Ventas owns a diversified healthcare portfolio of over 1,200 properties, including senior housing, medical offices, hospitals, life science facilities, and skilled nursing/post-acute care centers. The company also has a presence in Canada and the United Kingdom, and owns mortgages and other loans that contribute about 3% of net operating income.
Valuation of Ventas (VTR, Financial)
The 'GF Value' of a stock represents its intrinsic worth, calculated based on historical trading multiples, an internal adjustment factor from GuruFocus, and future business performance estimates. If the stock price is significantly above the GF Value Line, it may be overvalued and likely to deliver poor future returns. Conversely, if it's below the GF Value, the stock could be undervalued, promising higher future returns. Currently, Ventas' stock price aligns closely with its GF Value, indicating fair valuation.
Given that Ventas is fairly valued, the long-term return of its stock is likely to mirror the rate of its business growth.
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Financial Strength
Investing in companies with poor financial strength carries a higher risk of permanent capital loss. Ventas has a cash-to-debt ratio of 0.01, worse than 85.52% of companies in the REITs industry. GuruFocus ranks Ventas' overall financial strength at 3 out of 10, indicating poor financial health.
Profitability
Ventas has been profitable 9 out of the past 10 years, with a revenue of $4.2 billion and a loss per share of $-0.17 over the past twelve months. Its operating margin is 11.72%, ranking worse than 90.09% of companies in the REITs industry. Overall, Ventas' profitability is ranked 7 out of 10, indicating fair profitability.
Growth
Long-term stock performance is closely correlated with growth. Ventas' average annual revenue growth is -0.8%, ranking worse than 60.98% of companies in the REITs industry. The 3-year average EBITDA growth is -7.9%, which ranks worse than 72.68% of companies in the REITs industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted cost of capital (WACC) can help evaluate its profitability. Over the past 12 months, Ventas’ ROIC was 1.65, while its WACC came in at 7.45.
Conclusion
In summary, the stock of Ventas (VTR, Financial) appears to be fairly valued. The company's financial condition is poor, its profitability is fair, and its growth ranks worse than 72.68% of companies in the REITs industry. To learn more about Ventas stock, you can check out its 30-Year Financials here.
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