Ventas shares fell by -1.5% during the day's morning session, and are now trading at a price of $63.48. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
Ventas's Valuation Is in Line With Its Sector Averages:
Ventas, Inc. (NYSE: VTR) is a leading S&P 500 real estate investment trust enabling exceptional environments that benefit a large and growing aging population. The company belongs to the Real Estate sector, which has an average price to earnings (P/E) ratio of 31.12 and an average price to book (P/B) ratio of 2.15. In contrast, Ventas has a trailing 12 month P/E ratio of -453.4 and a P/B ratio of 2.73.
Ventas has moved 44.3% over the last year compared to 32.8% for the S&P 500 — a difference of 11.6%. Ventas has a 52 week high of $67.61 and a 52 week low of $41.45.
The Business Is Unprofitable and Its Balance Sheet Is Highly Leveraged:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $3,746 | $3,873 | $3,795 | $3,828 | $4,129 | $4,498 |
| Operating Margins | 10% | 11% | 2% | -4% | -2% | -3% |
| Net Margins | 11% | 11% | 12% | 1% | -1% | -1% |
| Net Income (M) | $416 | $439 | $441 | $57 | -$41 | -$30 |
| Net Interest Expense (M) | $442 | $452 | $470 | $440 | $468 | $574 |
| Depreciation & Amort. (M) | $920 | $1,046 | $1,110 | $1,197 | $1,198 | $1,392 |
| Diluted Shares (M) | 359 | 370 | 377 | 386 | 403 | 406 |
| Earnings Per Share | $1.14 | $1.17 | $1.17 | $0.13 | -$0.12 | -$0.1 |
| EPS Growth | n/a | 2.63% | 0.0% | -88.89% | -192.31% | 16.67% |
| Avg. Price | $43.89 | $54.27 | $37.4 | $50.17 | $52.34 | $63.61 |
| P/E Ratio | 38.17 | 45.99 | 31.69 | 385.92 | -436.17 | -636.1 |
| Free Cash Flow (M) | $1,250 | $1,281 | $1,070 | $778 | $888 | $736 |
| CAPEX (M) | $132 | $157 | $380 | $248 | $232 | $384 |
| EV / EBITDA | 20.16 | 21.15 | 21.36 | 29.64 | 29.98 | 30.09 |
| Total Debt (M) | $10,734 | $12,159 | $11,895 | $12,028 | $12,297 | $13,491 |
| Net Debt / EBITDA | 8.17 | 8.12 | 9.65 | 11.48 | 11.03 | 10.17 |
Ventas has declining EPS growth, positive cash flows, and a highly leveraged balance sheet. On the other hand, the company has growing revenues and increasing reinvestment in the business working in its favor.
