By Rob Otman
Welltower (NYSE: HCN) is a $25 billion company today. Investors that bought shares one year ago are sitting on a -1.87% total return. That’s below the S&P 500’s return of 21.79%.
Welltower stock is underperforming the market. It’s beaten down, but it reports earnings soon. So is it a good time to buy? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Welltower reported a recent EPS growth rate of -7.27%. That’s below the REIT industry average of 6.29%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the REIT industry is 49.09. And Welltower’s ratio comes in at 38.9. It’s trading at a better value than many of its competitors.
✓ Debt-to-Equity: The debt-to-equity ratio for Welltower stock is 72.47%. That’s below the REIT industry average of 92.5%. The company is less leveraged.
✓ Free Cash Flow per Share Growth: Welltower’s FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✗ Profit Margins: The profit margin of Welltower comes in at 18.9% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Welltower’s profit margin is below the REIT average of 65.25%. So that’s a negative indicator for investors.
✗ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Welltower is 8.59%, and that’s below its industry average ROE of 10.38%.
Welltower stock passes three of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Hold.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
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Source:: Investment You
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