Universal Health Realty Income Trust (NYSE: UHT)

Sector: Real Estate Industry: REIT - Healthcare Facilities CIK: 0000798783
Market Cap 605.24 Mn
P/B 3.51
P/E 31.35
P/S 7.83
ROIC (Qtr) 6.62
Div Yield % 7.92
Rev 1y % (Qtr) 3.30
Total Debt (Qtr) 375.63 Mn
Debt/Equity (Qtr) 2.37
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About

Universal Health Realty Income Trust (UHIT) is a real estate investment trust (REIT) operating in the healthcare industry. UHIT invests in healthcare-related facilities, including hospitals, medical office buildings, free-standing emergency departments, and childcare centers, spread across 21 states in the United States. The company generates revenue primarily through lease agreements with subsidiaries of Universal Health Services, Inc. (UHS), a healthcare services company. These lease agreements are triple-net, meaning that UHS is responsible...

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Investment thesis

Bull case

  • Operating cash flow of 48.65M provides strong 55.28x coverage of stock compensation 880000, indicating sustainable incentive practices.
  • Strong operating cash flow of 48.65M provides 1.64x coverage of SG&A expenses 29.73M, showing efficient operational cost management.
  • Robust free cash flow of 40.01M exceeds capital expenditure of 8.64M by 4.63x, indicating strong organic growth funding capability.
  • Strong free cash flow of 40.01M provides 1.35x coverage of SG&A expenses 29.73M, indicating efficient cost management.
  • Strong tangible asset base of 561.99M provides 92.97x coverage of intangibles 6.04M, indicating robust asset quality.

Bear case

  • Operating cash flow of 48.65M barely covers its investment activities of (15.14M), with a coverage ratio of -3.21, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 48.65M provides thin coverage of dividend payments of (40.87M) with a -1.19 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 6.92M provide limited coverage of acquisition spending of (6.50M), which is -1.06x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 37.07M show weak coverage of depreciation charges of 28.54M, with a 1.30 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 28.54M relative to operating cash flow of 48.65M, which is 0.59x suggests significant maintenance capital requirements affecting free cash flow.

Peer comparison

Companies in the REIT - Healthcare Facilities
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 WELL Welltower Inc. 143.17 Bn 152.82 13.21 21.38 Bn
2 VTR Ventas, Inc. 38.32 Bn 152.44 6.57 13.22 Bn
3 OHI Omega Healthcare Investors Inc 9.79 Bn 37.42 11.00 4.26 Bn
4 DOC Healthpeak Properties, Inc. 9.29 Bn 18.52 5.20 10.14 Bn
5 CTRE CareTrust REIT, Inc. 8.40 Bn 26.19 17.62 0.89 Bn
6 AHR American Healthcare REIT, Inc. 6.95 Bn -212.00 3.23 1.70 Bn
7 HR Healthcare Realty Trust Inc 6.42 Bn -26.10 5.44 4.15 Bn
8 NHI National Health Investors Inc 2.58 Bn 24.34 21.93 1.11 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.54 1.24
EV to Cash from Ops. EV/CFO 19.77 24.29
EV to Debt EV to Debt 2.32 3.18
EV to EBIT EV/EBIT 29.63 14.77
EV to EBITDA EV/EBITDA 17.03 19.20
EV to Free Cash Flow [EV/FCF] EV/FCF 34.14 1.78
EV to Market Cap EV to Market Cap 1.44 1.96
EV to Revenue EV/Rev 11.30 11.43
Price to Book Value [P/B] P/B 3.51 2.64
Price to Earnings [P/E] P/E 31.35 29.39
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.44 -1.90
Dividend Payout Ratio % Div Payout % (Qtr) 226.90 299.46
Dividend per Basic Share Div per Share (Qtr) 2.95 1.85
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 101.97 49.00
Interest Coverage Int. cover (Qtr) 1.94 2.08
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -56.33 -326.40
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 8.54 31.24
Dividend Growth (1y) % Div 1y % (Qtr) 1.37 12.81
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 1.09 35.66
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 0.79 12.40
EBIT Growth (1y) % EBIT 1y % (Qtr) 1.09 25.81
EBT Growth (1y) % EBT 1y % (Qtr) -1.21 71.96
EPS Growth (1y) % EPS 1y % (Qtr) -0.76 29.36
FCF Growth (1y) % FCF 1y % (Qtr) 3.41 -181.35
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 0.68 13.29
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.17 0.17
Cash Payout Ratio Cash Payout (Qtr) 0.71 0.07
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.00
Debt to Equity Ratio Debt/Equity (Qtr) 2.37 4.36
Interest Cover Ratio Int Coverage (Qtr) 1.94 2.08
Times Interest Earned Times Interest Earned (Qtr) 1.94 2.08
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 66.00 55.93
EBIT Margin % EBIT Margin % (Qtr) 37.31 28.99
EBT Margin % EBT Margin % (Qtr) 18.06 13.55
Gross Margin % Gross Margin % (Qtr) 100.00 71.26
Net Profit Margin % Net Margin % (Qtr) 18.10 13.18