Unraveling the Future of Sabra Health Care REIT Inc (SBRA): A Deep Dive into Key Metrics
Long-established in the REITs industry, Sabra Health Care REIT Inc (NASDAQ:SBRA) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 4.27%, juxtaposed with a three-month change of 21.97%. However, fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Sabra Health Care REIT Inc.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Financial strength rank: 4/10
Profitability rank: 6/10
Growth rank: 2/10
GF Value rank: 5/10
Momentum rank: 7/10
Based on the above method, GuruFocus assigned Sabra Health Care REIT Inc the GF Score of 68 out of 100, which signals poor future outperformance potential.
Understanding Sabra Health Care REIT Inc's Business
Sabra Health Care REIT Inc, with a market cap of $3.22 billion, is a healthcare facility real estate investment trust. The company operates one segment that owns and invests in healthcare real estate. All of the company's revenue, amounting to $628.24 million, is generated in the United States. Sabra's operations consist of nursing facilities, assisted living centers, and mental health facilities. The company considers merger and acquisition investment as a component of its operational growth strategy. Sabra works with existing operators to identify strategic development opportunities. The company's operating margin stands at 33.59%.
Financial Strength Breakdown
Sabra Health Care REIT Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 1.89 positions it worse than 72.37% of 655 companies in the REITs industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The company's Altman Z-Score is just 0.52, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.01 indicates a struggle in handling existing debt levels. Furthermore, the company's debt-to-Ebitda ratio is 13.11, which is above Joel Tillinghast's warning level of 4 and is worse than 79.05% of 549 companies in the REITs industry.
Growth Prospects
A lack of significant growth is another area where Sabra Health Care REIT Inc seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -8.4 per year over the past three years, which underperforms worse than 84.23% of 634 companies in the REITs industry. Over the past five years, Sabra Health Care REIT Inc has witnessed a decline in its earnings before interest, taxes, depreciation, and amortization (EBITDA). The three-year growth rate is recorded at -22.6, while the five-year growth rate is at -27. Lastly, Sabra Health Care REIT Inc predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While Sabra Health Care REIT Inc has a commendable history, the current indicators suggest that it may struggle to maintain its performance in the future. Investors should consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.
