HCP HCP Inc

On Mar 6, 2014, we issued an updated research report on the healthcare real estate investment trust (REIT) – HCP Inc. (HCP).

On Feb 11, aided by growth in revenues, HCP reported fourth-quarter 2013 adjusted FFO per share of 76 cents, 2 cents ahead of the Zacks Consensus Estimate and 4 cents above the prior-year quarter figure. Total revenue grew 5.4% from the year-ago period and also exceeded the Zacks Consensus Estimate.

Going forward, we believe that HCP is well poised for a strong growth trajectory given its well-balanced, diversified portfolio and opportunistic acquisitions. Moreover, aging population and rising healthcare expenses offer significant growth opportunities to this healthcare REIT.

The company has a decent balance sheet with investment grade credit ratings.  It has also increased its dividend per share for 29 consecutive years, with the latest dividend hike having occurred recently.

However, for a number of its tenants and operators, one of the key sources of revenues is governmental healthcare programs such as the federal Medicare program and state Medicaid programs and non-governmental payors. This is a concern as in the recent years governmental payors have reduced payments to healthcare providers due to budgetary pressures. Also, cut-throat competition and rising interest rates that are expected in the long term remain a challenge for this company.

Over the last 7 days, the Zacks Consensus Estimate have moved up a cent to $3.02 per share for 2014 and remained unchanged at $3.14 for 2015. The stock currently has a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

Some better-ranked stocks in the REIT industry include Cousins Properties Incorporated (CUZ), Liberty Property Trust (LPT) and Public Storage (PSA). All three stocks have a Zacks Rank #2 (Buy).

Note: FFO, a widely used metric to gauge the performance of REITs, are obtained after adding depreciation, amortization and other non-cash expenses to net income.

 
COUSIN PROP INC (CUZ): Free Stock Analysis Report
 
HCP INC (HCP): Free Stock Analysis Report
 
LIBERTY PPTY TR (LPT): Free Stock Analysis Report
 
PUBLIC STORAGE (PSA): Free Stock Analysis Report
 
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