Genesis Healthcare, Inc. (NYSE:GEN) and Brookdale Senior Living Inc. (NYSE:BKD) are both Healthcare companies that recently hit new highs. This price action has ruffled more than a few feathers in the investment community, but is one a better investment than the other? To answer this, we will compare the two companies across growth, profitability, risk, return, dividends, and valuation measures.
Genesis Healthcare, Inc. (NYSE:GEN) operates in the Long-Term Care Facilities segment of the Healthcare sector. The company has grown sales at a 46.40% annual rate over the past five years, putting it in the high growth category. GEN has a net profit margin of -8.60% and is less profitable than the average company in the Long-Term Care Facilities industry. In terms of efficiency, GEN has an asset turnover ratio of 0.09. This figure represents the amount of revenue a company generates per dollar of assets. Company’s return on equity, which is really just the product of the company’s profit margin, asset turnover, and financial leverage ratios, is 70.70%, which is better than the Long-Term Care Facilities industry average ROE.
Stock’s free cash flow yield, which represents the amount of cash available to investors before dividends, expressed as a percentage of the stock price, is -22.97. The average investment recommendation for GEN, taken from a group of Wall Street Analysts, is 3.00, or a hold.
Over the past three months, Genesis Healthcare, Inc. insiders have been net buyers, dumping a net of 0 shares. This implies that insiders have been feeling relatively bearish about the outlook for GEN. Insider activity and sentiment signals are important to monitor because they can shed light on how “risky” a stock is perceived to be at it’s current valuation. Knowing this, it makes sense to look at beta, a measure of market risk. GEN has a beta of 1.22 and therefore an above average level of market volatility.
Brookdale Senior Living Inc. (NYSE:BKD) operates in the Long-Term Care Facilities segment of the Healthcare sector. BKD has increased sales at a 15.20% CAGR over the past five years, and is considered a high growth stock. The company has a net profit margin of -17.80% and is less profitable than the average Long-Term Care Facilities player. BKD’s asset turnover ratio is 0.57 and the company has financial leverage of 4.36. BKD’s return on equity of -45.80% is worse than the Long-Term Care Facilities industry average.
The average analyst recommendation for BKD is 1.80, or a buy.
Brookdale Senior Living Inc. insiders have sold a net of -261,178 shares during the past three months, which implies that the company’s top executives have been feeling bearish about the stock’s outlook. Finally, BKD’s beta of 1.74 indicates that the stock has an above average level of market risk.
Genesis Healthcare, Inc. (NYSE:GEN) scores higher than Brookdale Senior Living Inc. (NYSE:BKD) on 6 of the 13 measures compared between the two companies. GEN has the better fundamentals, scoring higher on growth, profitability, leverage and return metrics. GEN has better insider activity and sentiment signals.