Contrasting SL Green Realty (NYSE:SLG) & CareTrust REIT (NYSE:CTRE)

CareTrust REIT (NYSE:CTRE) and SL Green Realty (NYSE:SLG) are both mid-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, earnings, analyst recommendations, valuation and dividends.

Insider and Institutional Ownership

87.8% of CareTrust REIT shares are held by institutional investors. Comparatively, 90.0% of SL Green Realty shares are held by institutional investors. 0.7% of CareTrust REIT shares are held by insiders. Comparatively, 5.0% of SL Green Realty shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

CareTrust REIT has a beta of 0.77, meaning that its share price is 23% less volatile than the S&P 500. Comparatively, SL Green Realty has a beta of 1.61, meaning that its share price is 61% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for CareTrust REIT and SL Green Realty, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CareTrust REIT	1	1	8	3	3.00
SL Green Realty	2	9	8	0	2.32

CareTrust REIT presently has a consensus price target of $42.82, indicating a potential upside of 11.72%. SL Green Realty has a consensus price target of $51.45, indicating a potential upside of 42.71%. Given SL Green Realty’s higher possible upside, analysts clearly believe SL Green Realty is more favorable than CareTrust REIT.

Profitability

This table compares CareTrust REIT and SL Green Realty’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CareTrust REIT	67.28%	8.98%	6.83%
SL Green Realty	-9.66%	-2.44%	-0.86%

Dividends

CareTrust REIT pays an annual dividend of $1.34 per share and has a dividend yield of 3.5%. SL Green Realty pays an annual dividend of $2.47 per share and has a dividend yield of 6.9%. CareTrust REIT pays out 86.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. SL Green Realty pays out -153.4% of its earnings in the form of a dividend. CareTrust REIT has increased its dividend for 3 consecutive years and SL Green Realty has increased its dividend for 1 consecutive years. SL Green Realty is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares CareTrust REIT and SL Green Realty”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CareTrust REIT	$476.39 million	17.96	$320.54 million	$1.55	24.73
SL Green Realty	$1.00 billion	2.56	-$88.28 million	($1.61)	-22.39

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

Summary

CareTrust REIT beats SL Green Realty on 10 of the 17 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 SL Green Realty

3SL Green Realty Corp., Manhattan’s largest office landlord, is a fully integrated real estate investment trust, or REIT, that is focused primarily on acquiring, managing and maximizing value of Manhattan commercial properties. As of June 30, 2022, SL Green held interests in 64 buildings totaling 34.4 million square feet. This included ownership interests in 26.3 million square feet of Manhattan buildings and 7.2 million square feet securing debt and preferred equity investments.