OHI
Omega Healthcare Investors, Inc.
$47.90
Real Estate Investment Trust
85%
P/FFO × Healthcare REIT Multiple
Moderate
·
Conviction
Fair Value
Trading 22.1% below fair value
You pay
$47.90
Bear
$48.83
Fair
$61.47
Bull
$74.12
Bear
$48.83
+1.9%
$3.07 FFO × 18x
Fair
$61.47
+28.3%
$3.07 FFO × 23x
Bull
$74.12
+54.7%
$3.07 FFO × 29x
Key Value Driver
FFO/share ($3.07) × healthcare P/FFO multiple
Implied Market Multiple
15.6x
Summary
Our base-case estimate uses P/FFO × Healthcare REIT Multiple. We then blend that result with the average analyst price target of $49.89 from 28 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $61.47 per share.
Warnings
Standard profit figures are misleading for real estate companies — large non-cash accounting charges make profits look artificially low. Dividend yield and funds from operations are better measures.
Dividend yield of 5.6% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $49.89 (from 28 analysts). Our estimate is 31% above the consensus -- consider that gap carefully.
Key Risks
- P/E and EV/EBITDA are structurally wrong for REITs — use P/FFO and NAV
- Interest rate sensitivity: REIT multiples compress when rates rise
- FFO approximation (NI + D&A) may include gains on property sales — verify