As of July 20, 2023, Ventas Inc (VTR, Financial) is seeing a positive change in its stock price, showing a gain of 3.07%. The company's stock price stands at $49.69, with a GF Value of $51.79, indicating a fair valuation. Ventas, a prominent player in the healthcare real estate sector, boasts a market cap of $19.9 billion and annual sales of $4.2 billion. Despite a loss per share of $-0.17, the company's diversified healthcare portfolio and potential for growth make it an intriguing prospect for investors.
Ventas owns over 1,200 properties worldwide, including senior housing, medical offices, hospitals, life science facilities, and skilled nursing/post-acute care centers. With a presence in Canada and the United Kingdom, Ventas continues to seek investment opportunities in countries with mature healthcare systems similar to the United States. The company also holds mortgages and other loans, contributing about 3% to its net operating income.
GF Value Estimation: Fair Valuation
Based on the unique GuruFocus valuation method, the stock of Ventas (VTR, Financial) appears to be fairly valued. The GF Value is calculated using historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and estimates of future business performance. As the current price per share of Ventas is $49.69, the stock is estimated to be fairly valued, suggesting that the long-term return of its stock will likely align with the rate of its business growth.
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Financial Strength: A Closer Look
Investing in companies with poor financial strength can lead to a higher risk of permanent capital loss. Therefore, it's crucial to thoroughly review a company's financial strength before investing. Ventas has a cash-to-debt ratio of 0.01, ranking it below 85.52% of companies in the REITs industry. GuruFocus ranks Ventas's overall financial strength at 3 out of 10, indicating poor financial strength.
Profitability and Growth: Key Factors
Investing in profitable companies carries less risk, especially those with consistent profitability over the long term. Ventas has been profitable 9 years over the past 10 years, despite a loss per share of $-0.17 in the last 12 months. However, its operating margin of 11.72% ranks worse than 90.09% of companies in the REITs industry.
Growth is a vital factor in a company's valuation. The 3-year average annual revenue growth rate of Ventas is -0.8%, which ranks worse than 60.98% of companies in the REITs industry. Its 3-year average EBITDA growth rate is -7.9%, ranking it below 72.68% of companies in the REITs industry.
ROIC vs WACC: A Profitability Indicator
Comparing a company's return on invested capital (ROIC) to its weighted average cost of capital (WACC) can indicate profitability. For the past 12 months, Ventas's ROIC stands at 1.65, while its WACC is 7.45, suggesting the company may need to improve its value creation for shareholders.
Conclusion: Ventas (VTR, Financial) - A Fairly Valued Prospect
In conclusion, Ventas (VTR) appears to be fairly valued, with poor financial strength but fair profitability. Its growth ranks lower than 72.68% of companies in the REITs industry. To learn more about Ventas stock, check out its 30-Year Financials here.
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