Stock Analysis

Sabra Health Care REIT (NASDAQ:SBRA) Share Prices Have Dropped 18% In The Last Year

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NasdaqGS:SBRA
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Sabra Health Care REIT, Inc. (NASDAQ:SBRA) shareholders should be happy to see the share price up 24% in the last quarter. But that doesn't change the fact that the returns over the last year have been less than pleasing. The cold reality is that the stock has dropped 18% in one year, under-performing the market.

See our latest analysis for Sabra Health Care REIT

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Sabra Health Care REIT stole the show with its EPS rocketing, in the last year. We don't think the growth guide to the sustainable growth rate in this case, but we do think this sort of increase is impressive. As you can imagine, the share price action therefore perturbs us. Some different data might shed some more light on the situation.

Sabra Health Care REIT's dividend seems healthy to us, so we doubt that the yield is a concern for the market. The revenue trend doesn't seem to explain why the share price is down. Unless, of course, the market was expecting a revenue uptick.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
NasdaqGS:SBRA Earnings and Revenue Growth December 21st 2020

We know that Sabra Health Care REIT has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think Sabra Health Care REIT will earn in the future (free profit forecasts).

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Sabra Health Care REIT, it has a TSR of -10% for the last year. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

While the broader market gained around 24% in the last year, Sabra Health Care REIT shareholders lost 10% (even including dividends). Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 6%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Sabra Health Care REIT better, we need to consider many other factors. Take risks, for example - Sabra Health Care REIT has 4 warning signs (and 1 which is a bit concerning) we think you should know about.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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What are the risks and opportunities for Sabra Health Care REIT?

As of March 31, 2022, Sabra’s investment portfolio included 416 real estate properties held for investment.

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Rewards

  • Trading at 49.6% below our estimate of its fair value

  • Earnings are forecast to grow 27.73% per year

Risks

  • Interest payments are not well covered by earnings

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Sabra Health Care REIT

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