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3 Reasons Growth Investors Will Love Welltower (WELL)
ZACKS· 2025-11-04 18:46
Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, particularly in the financial sector, to achieve exceptional returns. However, identifying such stocks can be challenging due to inherent volatility and risks associated with growth stocks [1]. Group 1: Growth Stock Identification - The Zacks Growth Style Score system aids in identifying promising growth stocks by analyzing a company's real growth prospects beyond traditional metrics. Welltower (WELL) is highlighted as a recommended stock with a favorable Growth Score and a top Zacks Rank [2]. - Research indicates that stocks with strong growth features consistently outperform the market, especially those with a Growth Score of A or B and a Zacks Rank of 1 (Strong Buy) or 2 (Buy) [3]. Group 2: Earnings Growth - Earnings growth is a critical factor for investors, with double-digit growth being particularly desirable as it signals strong future prospects and potential stock price increases [4]. - Welltower's historical EPS growth rate stands at 8.3%, but projected EPS growth for the current year is significantly higher at 19.1%, far exceeding the industry average of 1.3% [5]. Group 3: Asset Utilization and Sales Growth - The asset utilization ratio, or sales-to-total-assets (S/TA) ratio, is an important metric for growth investing. Welltower's S/TA ratio is 0.18, indicating it generates $0.18 in sales for every dollar in assets, outperforming the industry average of 0.13 [6]. - Welltower is also well-positioned for sales growth, with expected sales growth of 28.6% this year compared to the industry average of 0.4% [7]. Group 4: Earnings Estimate Revisions - Trends in earnings estimate revisions are crucial for validating a stock's performance potential. A positive trend in revisions correlates strongly with near-term stock price movements [8]. - Welltower's current-year earnings estimates have been revised upward, with the Zacks Consensus Estimate increasing by 2.5% over the past month [9]. Group 5: Overall Positioning - Welltower has achieved a Zacks Rank of 2 due to favorable earnings estimate revisions and has earned a Growth Score of B based on several key factors discussed. This combination positions Welltower for potential outperformance, making it an attractive option for growth investors [11].