Though the company beat Wall Street estimates in the fourth quarter, HCP’s (NYSE: HCP) stock has been pummeled. It lost more than 20% since its earnings announcement on weak 2016 management guidance on challenges that have been already widely reported. The stock clearly has been oversold on panic selling as part of the broad sell off that has occurred around the world.

This is true especially when you consider the company beat Wall Street earnings estimates on funds from operations (FFO). FFO is  a closely watched metric in the REIT space, and HCP’s came in at of 80 cents, compared with analyst consensus estimates of 78 cents. Further, the company posted revenues of $668 million verus $603 million a year ago, also beating estimates. And the firm raised its dividend for the 31st year in a row, a reason this company continues to be our #1 REIT Portfolio Best Buy 

The company is a real estate investment trust (REIT) which owns or holds interests in $22 billion worth of healthcare-related properties. Its holdings include 20 hospitals, 444 senior housing properties, 302 nursing facilities, 115 properties occupied by biotechnology and pharmaceutical companies and more than 270 medical offices.

Investors continue to be concerned about its core tenant HCR ManorCare, which makes up about 23% of its revenues, which has been experiencing difficulties due to the overall slowing in the post-acute/skilled nursing sector, so much so that HCP cut its rent last year.

And this last quarter HCP took an $817 million impairment charge, citing a “reduced growth outlook for the broader post-acute/SNF industry indicates challenges to the improvement in HCRMC’s financial performance over the next few years.”

On the issue affecting the stock, the HCR ManorCare problem is serious, no doubt. But its resolvable by a management that has been able to deliver strong dividend through thick and thin. It is the only REIT Dividend Aristocrat, having provided 31 consecutive years of dividend increases.

Further the company does have the cash in the short term to keep supporting the dividend. The CFO recently said: “we’ve got $165 million of free cash flow after our dividend payout ratio today, so we’ve got quite a bit of cushion today and continue to have cushion in our dividend payout ratio.”

And HCP anticipates 2016 same property performance cash net operating growth, (excluding HCRMC) to be in the range of 1.5% – 2.5% and same property performance cash NOI growth rate of 2.3% – 3.3%. So on balance the firm is still growing.

It’s easy to lose one’s head in this highly volatile environment, but we believe a company and management that has had a long track record of high financial and operational performance deserves some latitude to right the ship in stormy waters. And investors will be richly rewarded if they are successful.

That being said, we will be monitoring this firm closely to see if the situation deteriorates, but again we believe the Manor Care problem and the slowdown in the post-acute/skilled nursing sector is a short term bump as the gargantuan, long-term senior care needs of retiring baby boomers will prevail. We reiterate HCP is a Buy up to $44.