Healthcare Realty Trust Incorporated (NYSE:HR) is a US$3.54B real estate investment trust (REIT), which is a collective vehicle for investing in real estate that began in the US and has since been adopted worldwide as an investment asset. Real estate analysts are forecasting for the entire industry, negative growth in the upcoming year . Today, I’ll take you through the real estate sector outlook, as well as evaluate whether Healthcare Realty Trust is lagging or leading in the industry. See our latest analysis for Healthcare Realty Trust
What’s the catalyst for Healthcare Realty Trust’s sector growth?
Concerns surrounding rate increases and treasury yield movements have made investors dubious around investing in REIT stocks. This is because REITs tend to be dependent on debt funding. They are also considered as bond investment alternatives due to their high and stable dividend payments. In the past year, the industry delivered growth of 3.14%, though still underperforming the wider US stock market. Healthcare Realty Trust leads the pack with its impressive earnings growth of 91.69% over the past year. However, analysts are not expecting this industry-beating trend to continue, with future growth expected to be -47.09% compared to the wider REIT sector growth hovering next year.
Is Healthcare Realty Trust and the sector relatively cheap?
The REIT sector’s PE is currently hovering around 20.17x, in-line with the US stock market PE of 18.88x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. However, the industry returned a lower 7.46% compared to the market’s 10.49%, potentially indicative of past headwinds. On the stock-level, Healthcare Realty Trust is trading at a higher PE ratio of 29.37x, making it more expensive than the average REIT stock. In terms of returns, Healthcare Realty Trust generated 6.45% in the past year, which is 1.01% below the REIT sector.
Healthcare Realty Trust is a REIT industry laggard in terms of its future growth outlook. In addition to this, the stock is trading at a PE above its peers, meaning it is more expensive on a relative earnings basis.If Healthcare Realty Trust has been on your watchlist for a while, now may not be the best time to enter into the stock. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the real estate sector. However, before you make a decision on the stock, I suggest you look at Healthcare Realty Trust’s fundamentals in order to build a holistic investment thesis.
- 1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- 2. Historical Track Record: What has HR’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- 3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Healthcare Realty Trust? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.