Manor Care Inc., the Silver Spring-based nursing home company that has successfully targeted the affluent elderly, has become one of the fastest-growing companies in the industry in the last several years through a combination of acquisitions and internal development.

The value of its stock has skyrocketed -- a fact that is masked by the current stock price, which has been held down by frequent stock splits.

In the most recent split, payable Dec. 6 for shareholders of record as of today, Manor Care will give investors in the company's common stock three shares for every two they own. This 3-for-2 split is the company's sixth stock split since January 1980. On Nov. 12, the date the split was announced, the price was $25 a share.

Without the splits, the price would have been dramatically different. One share of Manor Care stock purchased in 1979 for about $20 a share would be worth 13.6 times that amount, or $272 today, according to the company.

Despite a high level of debt on the company's balance sheet and the high price of the company's stock relative to its earnings, analysts are bullish about Manor Care.

"This is an attractive company in an attractive industry, and the appeal is based on the rapid growth of the aging population in this country," said Louis E. Hannen, an analyst with Wheat, First Securities in Richmond. "The over-85 age group is growing six times as fast as the overall population, and smaller families and increased mobility mean there are less kids available in the home town to take care of the aging population."

The relatively frequent stock splits are a device the company has adopted to help retain its attractiveness to investors.

Unlike Manor Care, some publicly traded corporations avoid stock splits. They prefer to have a high stock price, which they believe contributes to a prestigious image.

When a company gives shareholders additional stock through a split, it proportionately reduces the price of its stock, leaving shareholders with the same aggregate value, but more shares.

While it appears at first glance that the stock split is nothing more than a redistribution of paper, Manor Care achieves two important goals through the split, both of which have something to do with investor psychology.

By reducing the price of its shares, Manor Care increases demand for its stock among individual investors, who prefer to buy stock at lower prices, from $15 to $20, for instance. Such prices make it easier to buy round lots, or quantities divisible by 100. Second, the splits are designed to make the stock more attractive to institutions, which generally prefer to buy stocks that are broadly held so that they can buy or sell their shares without affecting the stock's price.

Increasing the number of shares outstanding through splits has, in fact, led to wider distribution of Manor Care stock, making the company's shares more attractive to institutions, which own about 30 percent of its stock. However, one reason it is difficult for Manor Care to promote the wide distribution preferred by institutional investors even with the stock splits is that Chairman Stewart Bainum and his family own about 37 percent of the New York Stock Exchange-listed company's shares.

Manor Care is the fourth-largest publicly owned nursing home company, with 153 health-care facilities and more than 19,000 beds. What distinguishes the company from its competitors, including Beverly Enterprises, the industry's largest nursing home operator, is the marketing of the chain to the elderly who can pay nursing home bills without assistance. While about 65 percent of the residents in a typical nursing home rely on government assistance to cover costs, only about 43 percent of the patients in Manor Care facilities depend on government aid.

At a time when many states are restricting the number of nursing homes built to hold down the cost of aid to the elderly, Manor Care's strategy is quite effective. By targeting patients who can pay their own way, the company is less subject to decisions by government officials that limit Medicare and Medicaid payments.

Although Manor Care is increasing its development staff to expand its nursing home operations through internal growth, its dramatic increase in size in the last several years has come from large acquisitions. The most recent was the purchase on April 26 of Four Seasons Nursing Centers Inc. from Anta Corp., a company with about 30 nursing centers and more than 4,000 beds.

Future growth through large acquisitions will be difficult for Manor Care because of the company's desire to maintain a high proportion of patients who can pay their own way, analysts said. Company officials said growth will come through an increased number of small acquisitions and internal development.

Experts believe there will be a tremendous consolidation in the highly fragmented industry during the next decade, because the largest companies own only a small percentage of the overall number of nursing-home beds.

Manor Care's profit margins compare favorably with those of other nursing home companies. The company's pretax operating margin last year was 11.9 percent, compared with about 6 percent for other industry leaders, according to Raymond G. Murphy, the company's vice president for corporate development.

The company has been criticized for not taking its fair share of patients who cannot pay bills without government assistance, and has been scrutinized closely by industry observers and regulators because of this strategy, said Dr. C. Arnold Renschler, president of the health-care division. He said the company's strategy in certain states depends on the state's level of reimbursements.

"In Maryland, we are about 55 percent private pay in the aggregate, and in Illinois, we are over 70 percent and it's no accident," Renschler said. "The reimbursement rate in Maryland for Medicaid patients is $51 a day compared to the low $30s in Illinois. We respond to what is available to us that is consistent with offering a high-quality product. We strive to be the facility of choice."

Manor Care owns an acute-care hospital in Texas but has made a decision not to expand in that field because of uncertainty in the industry. The company owns three rehabilitation centers.

Another trend among companies in the industry is the development of retirement communities, which Manor Care officials call "assisted living centers." Company officials said Manor Care will establish pilot facilities in this field.

As changes in the reimbursement system and employe benefits encourage shorter hospital stays, Manor Care increasingly has filled nursing homes with recovering patients released by the hospitals. The company believes this trend will continue.

Manor Care's nursing home facilities charge varying costs, depending on location, the level of care required and the cost to build specific facilities. Charges range from $42 a day in the Southwest to more than $120 a day in some of its upscale "Williamsburg concept" facilities.

The company spent between $25,000 and $33,000 per bed to build facilities in the last year, while its acquisition of Anta's Four Seasons nursing homes cost about $19,000 per bed. Recent acquisitions by others in the industry have been for more than $25,000 per bed, according to Manor Care officials.

The company derives most of its revenue from nursing homes but also owns Quality Inns International. The company is continuing a program of selling the inns it owns, preferring to emphasize the franchise and management businesses and its international reservation system. By selling most of the inns it owns, Manor Care can raise cash to reduce its $331 million in debt, which is about three times the company's book value, and to expand its nursing home operations.

In the 1984 fiscal year that ended in May, Manor Care had revenue of $363.9 million, net income of $22.9 million and earnings per share of $1.30, versus revenue of $345.6 million, net income of $17.2 million and earnings per share of $1.04 in 1983.

During the first quarter of fiscal 1985, Manor Care had revenue of $113.2 million, net income of $7.7 million and earnings per share of 43 cents, versus revenue of $64.9 million, net income of $5.9 million and earnings per share of 34 cents during the first quarter last year.

Analysts attributed the high price of Manor Care's stock partially to interest in the company as a takeover target. They said the Bainum family's large stock holding and the uncertainty about who will succeed Bainum, 65, as chairman, have contributed to the discussion about the sale of the company.

Bainum's son, Stewart Bainum Jr., is an ideal candidate to assume his father's job some day, analysts said. However, Bainum Jr., 38, is a member of Maryland's state Senate and prefers to focus on politics.