Critical Review: Medalist Diversified REIT (NASDAQ:MDRR) & CareTrust REIT (NASDAQ:CTRE)

CareTrust REIT (NASDAQ:CTRE) and Medalist Diversified REIT (NASDAQ:MDRR) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Risk & Volatility

CareTrust REIT has a beta of 1.09, meaning that its stock price is 9% more volatile than the S&P 500. Comparatively, Medalist Diversified REIT has a beta of 0.74, meaning that its stock price is 26% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for CareTrust REIT and Medalist Diversified REIT, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CareTrust REIT	0	3	3	0	2.50
Medalist Diversified REIT	0	0	0	0	N/A

CareTrust REIT currently has a consensus price target of $25.50, indicating a potential downside of 8.37%. Given CareTrust REIT’s higher probable upside, analysts plainly believe CareTrust REIT is more favorable than Medalist Diversified REIT.

Dividends

CareTrust REIT pays an annual dividend of $1.16 per share and has a dividend yield of 4.2%. Medalist Diversified REIT pays an annual dividend of $0.16 per share and has a dividend yield of 1.3%. CareTrust REIT pays out 223.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Medalist Diversified REIT pays out -8.7% of its earnings in the form of a dividend.

Insider and Institutional Ownership

87.8% of CareTrust REIT shares are owned by institutional investors. Comparatively, 17.4% of Medalist Diversified REIT shares are owned by institutional investors. 1.8% of CareTrust REIT shares are owned by company insiders. Comparatively, 16.9% of Medalist Diversified REIT shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares CareTrust REIT and Medalist Diversified REIT’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CareTrust REIT	$213.60 million	18.51	$53.74 million	$0.52	53.52
Medalist Diversified REIT	$10.17 million	1.35	-$4.57 million	($1.84)	-6.66

CareTrust REIT has higher revenue and earnings than Medalist Diversified REIT. Medalist Diversified REIT is trading at a lower price-to-earnings ratio than CareTrust REIT, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares CareTrust REIT and Medalist Diversified REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CareTrust REIT	30.09%	5.31%	3.60%
Medalist Diversified REIT	-19.20%	-21.37%	-4.03%

Summary

CareTrust REIT beats Medalist Diversified REIT on 13 of the 15 factors compared between the two stocks.

About CareTrust REIT

CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition, development and leasing of skilled nursing, seniors housing and other healthcare-related properties. With a nationwide portfolio of long-term net-leased properties, and a growing portfolio of quality operators leasing them, CareTrust REIT is pursuing both external and organic growth opportunities across the United States.

About Medalist Diversified REIT

Medalist Diversified REIT Inc. is a Virginia-based real estate investment trust that specializes in acquiring, owning and managing commercial real estate in the Southeast region of the U.S. The Company's strategy is to focus on commercial real estate which is expected to provide an attractive balance of risk and returns. Medalist utilizes a rigorous, consistent and replicable process for sourcing and conducting due diligence of acquisitions.