Now trading at a price of $88.31, Welltower has moved 0.9% so far today.
Welltower returned gains of 31.0% last year, with its stock price reaching a high of $89.69 and a low of $62.62. Over the same period, the stock outperformed the S&P 500 index by 15.0%. More recently, the company's 50-day average price was $84.12. Welltower Inc. (NYSE:WELL), a real estate investment trust ("REIT") and S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. Based in Toledo, OH, the large-cap Real Estate company has 514 full time employees. Welltower has offered a 2.8% dividend yield over the last 12 months.
The Company Has a Highly Leveraged Balance Sheet and a Declining EPS Growth Trend:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $4,700 | $5,121 | $4,606 | $4,742 | $5,861 | $6,219 |
| Operating Margins | 9.0% | 11.0% | -1.0% | 4.0% | 3.0% | 3.0% |
| Net Margins | 18.0% | 26.0% | 23.0% | 8.0% | 3.0% | 2.0% |
| Net Income (MM) | $830 | $1,330 | $1,039 | $374 | $161 | $134 |
| Net Interest Expense (MM) | $527 | $556 | $514 | $490 | $530 | $577 |
| Depreciation & Amort. (MM) | $950 | $1,027 | $1,038 | $1,038 | $1,310 | $1,377 |
| Earnings Per Share | $2.02 | $3.05 | $2.33 | $0.78 | $0.3 | $0.21 |
| Diluted Shares (MM) | 375 | 404 | 417 | 427 | 465 | 555 |
| Free Cash Flow (MM) | -$1,976 | $1,207 | $1,120 | $857 | $697 | $582 |
| Capital Expenditures (MM) | $3,560 | $329 | $245 | $418 | $632 | $819 |
| Net Current Assets (MM) | -$13,545 | -$15,493 | -$14,006 | -$12,754 | -$11,707 | -$11,095 |
| Long Term Debt (MM) | $14,329 | $16,385 | $14,193 | $14,644 | $14,869 | $16,240 |
| Net Debt / EBITDA | 10.27 | 10.26 | 12.56 | 11.9 | 9.6 | 8.88 |
Welltower's financial statements include several red flags such as weak operating margins with a negative growth trend, declining EPS growth, and a deteriorating pattern of cash flows. Additionally, the firm has a highly leveraged balance sheet. On the other hand, the company has growing revenues and decreasing reinvestment in the business working in its favor.
Welltower's Valuation Is in Line With Its Sector Averages:
Welltower has a trailing twelve month P/E ratio of 158.7, compared to an average of 24.81 for the Real Estate sector. Based on its EPS guidance of $1.23, the company has a forward P/E ratio of 68.4. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is -31.4%. On this basis, the company's PEG ratio is -5.05, which indicates that its shares are overpriced. In contrast, the market is likely undervaluing Welltower in terms of its equity because its P/B ratio is 2.05 while the sector average is 2.24. The company's shares are currently trading 528.1% above their Graham number.
Welltower Has an Analyst Consensus of Some Upside Potential:
The 16 analysts following Welltower have set target prices ranging from $78.0 to $101.0 per share, for an average of $90.5 with a buy rating. As of April 2023, the company is trading -7.0% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Welltower has an average amount of shares sold short because 2.5% of the company's shares are sold short. Institutions own 98.8% of the company's shares, and the insider ownership rate stands at 0.06%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 15% stake in the company is worth $7,131,299,186.
