Quick Report on Ventas (VTR)

We've been asking ourselves recently if the market has placed a fair valuation on Ventas. Let's dive into some of the fundamental values of this large-cap Real Estate company to determine if there might be an opportunity here for value-minded investors.

Ventas Has an Attractive P/B Ratio but a Worrisome P/E Ratio:

Ventas Inc., an S&P 500 company, operates at the intersection of two large and dynamic industries – healthcare and real estate. The company belongs to the Real Estate sector, which has an average price to earnings (P/E) ratio of 24.81 and an average price to book (P/B) ratio of 2.24. In contrast, Ventas has a trailing 12 month P/E ratio of 197.0 and a P/B ratio of 1.74.

When we divide Ventas's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -9.93. Since it's negative, the company has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.

Shareholders Are Confronted With a Declining EPS Growth Trend:

2018-02-09 2019-02-08 2020-02-24 2021-02-23 2022-02-18 2023-02-10
Revenue (MM) $3,574 $3,746 $3,873 $3,795 $3,828 $4,129
Operating Margins 30% 26% 22% 16% 10% 11%
Net Margins 38.0% 11.0% 11.0% 12.0% 1.0% -1.0%
Net Income (MM) $1,356 $409 $433 $439 $49 -$47
Net Interest Expense (MM) -$448 -$442 -$452 -$470 -$440 -$468
Depreciation & Amort. (MM) -$888 -$920 -$1,046 -$1,110 -$1,197 -$1,198
Earnings Per Share $3.78 $1.14 $1.17 $1.17 $0.13 -$0.13
EPS Growth n/a -69.84% 2.63% 0.0% -88.89% -200.0%
Diluted Shares (MM) 359 359 370 377 386 377
Free Cash Flow (MM) $1,665 $1,756 $2,809 $1,013 $1,988 $1,908
Capital Expenditures (MM) -$236 -$375 -$1,371 $437 -$962 -$788
Net Current Assets (MM) -$12,610 -$11,988 -$13,727 -$12,964 -$12,977 -$13,190
Long Term Debt (MM) $11,276 $10,734 $12,159 $11,895 $12,028 $12,297

Ventas has weak revenue growth and a flat capital expenditure trend, irregular cash flows, and an average amount of debt. Furthermore, the firm suffers from weak operating margins with a negative growth trend and declining EPS growth.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.