Ventas

Methodology

This EPS-based method has fundamental limitations for Ventas as a healthcare REIT, since depreciation distorts reported earnings despite stable cash flows from senior housing, medical office, and life science properties. Investors should use FFO (Funds From Operations) or AFFO (Adjusted FFO) per share-based models instead of P/E ratios, as these metrics add back depreciation to reflect the economic reality of real estate ownership. The Peter Lynch framework is not appropriate for REIT valuation without significant modifications.

Methodology

Traditional PEG analysis is problematic for Ventas given GAAP depreciation distortions that make EPS growth unreliable for measuring true business performance across its diversified healthcare property portfolio. If using PEG, investors must substitute FFO or AFFO growth for EPS growth, and even then should compare the result to FFO multiples of other healthcare REITs. Price-to-FFO relative to same-store NOI growth provides more reliable valuation signals for healthcare REITs than EPS-based PEG.

Methodology

While Ventas pays a substantial dividend as required by REIT tax status, PEGY calculations using GAAP earnings remain misleading due to depreciation distortions that understate true profitability. Investors should evaluate dividend sustainability by examining FFO and AFFO payout ratios rather than relying on EPS-based PEGY. For healthcare REITs like Ventas, dividend yield combined with FFO growth and occupancy trends across senior housing and medical office provides better total return analysis than traditional PEGY frameworks.