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CareTrust REIT (CTRE)
NYSE:CTRE
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CareTrust REIT
(NYSE:CTRE)
79Outperform
Positive Factors
Earnings Growth
The acquisition of Care REIT diversifies CTRE's portfolio and strengthens earnings growth by expanding into the UK and reducing US Medicaid exposure.
Financial Performance
CTRE expects the acquisition to be accretive by 5.9% to normalized funds from operations.
Portfolio Quality
The high-quality portfolio now consists of more senior housing, increasing exposure from 12% to 44%, which is favorable for future earnings growth.
Negative Factors
Acquisition Price
The price of the acquisition was more aggressive compared to recent acquisitions by other companies.
Acquisition Uncertainty
The acquisition is contingent on a shareholder vote and could be terminated if not completed by July 9, 2025, creating uncertainty.
Leverage Increase
Leverage is expected to rise to 1.7x (midpoint) from the current 0.5x.
CareTrust REIT (CTRE) vs. S&P 500 (SPY)
Market Cap
$5.30B
Dividend Yield4.26%
Average Volume (3M)1.91M
Price to Earnings (P/E)35.2
Beta (1Y)0.29
Revenue Growth36.06%
EPS Growth61.55%
CountryUS
Employees21
SectorReal Estate
Sector Strength71
IndustryREIT - Healthcare Facilities
Share Statistics
EPS (TTM)0.78
Shares Outstanding187,661,900
10 Day Avg. Volume2,187,322
30 Day Avg. Volume1,909,589
Financial Highlights & Ratios
PEG Ratio0.57
Price to Book (P/B)N/A
Price to Sales (P/S)18.14
Price to Cash Flow (P/CF)17.90
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$31.63Price Target Upside11.33% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering8
CareTrust REIT Business Overview & Revenue Model
Company DescriptionCareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition, development and leasing of skilled nursing, seniors housing and other healthcare-related properties. With a nationwide portfolio of long-term net-leased properties, and a growing portfolio of quality operators leasing them, CareTrust REIT is pursuing both external and organic growth opportunities across the United States.
How the Company Makes MoneyCareTrust REIT makes money primarily through the leasing of its properties to healthcare operators. The company's revenue model is based on a triple-net lease structure, where tenants are responsible for the majority of the property-related expenses, including maintenance, insurance, and taxes. This model provides a stable and predictable cash flow for CareTrust REIT. Additionally, the company occasionally engages in property acquisitions and dispositions to optimize its portfolio and enhance profitability. Strategic partnerships with reliable healthcare operators are crucial for maintaining occupancy rates and securing long-term leases, which directly contribute to the company's earnings.
CareTrust REIT Financial Statement Overview
Summary
CareTrust REIT has shown strong revenue growth and profitability, with impressive gross and EBIT margins. The balance sheet is robust with zero debt and a strong equity ratio. Cash flow is healthy, though there are potential volatilities in investment and capital structure strategies.Income Statement
CareTrust REIT has demonstrated strong revenue growth, with total revenue increasing from $159.06 million in 2019 to $296.29 million in 2024. The company maintains impressive gross profit and EBIT margins, consistently above 90% and 70%, respectively, in recent years. Net profit margin shows significant improvement, reaching 42.22% in 2024 from 11.46% in 2019, indicating enhanced profitability. However, fluctuations in EBITDA margin, which decreased in 2023, suggest potential volatility in operational efficiency.82
Very Positive
Balance Sheet
CareTrust REIT boasts a solid balance sheet with zero total debt in 2024, showcasing excellent financial health and risk management. The equity ratio improved to 84.64% in 2024, reflecting a strong equity base relative to assets. Return on equity (ROE) has substantially increased, reaching 4.30% in 2024, up from 1.97% in 2019, indicating effective utilization of shareholders' equity to generate profits. The absence of debt enhances financial stability and lowers risk exposure.88
Very Positive
Cash Flow
The company exhibits robust cash flow generation, with operating cash flow reaching $244.25 million in 2024, up from $126.30 million in 2019. Free cash flow also shows strong growth, reflecting efficient capital expenditure management with consistent positive free cash flow. The operating cash flow to net income ratio remained healthy at 1.95 in 2024, demonstrating strong cash generation relative to net income. However, significant fluctuations in investing and financing cash flows highlight potential volatility in investment and capital structure strategies.79
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 296.29M | 217.77M | 187.51M | 190.19M | 175.69M | Gross Profit |
| 294.96M | 208.18M | 178.13M | 186.62M | 170.98M | EBIT |
| 266.04M | 186.37M | 112.44M | 106.56M | 104.56M | EBITDA |
| 211.54M | 145.80M | 162.81M | 161.96M | 157.38M | Net Income Common Stockholders |
| 125.08M | 53.73M | 42.87M | 48.30M | 57.21M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 213.82M | 294.45M | 13.18M | 19.89M | 18.92M | Total Assets |
| 3.44B | 2.08B | 1.62B | 1.64B | 1.50B | Total Debt |
| 396.93M | 595.60M | 719.50M | 673.40M | 545.59M | Net Debt |
| 183.10M | 301.15M | 706.32M | 653.50M | 526.67M | Total Liabilities |
| 507.63M | 666.12M | 771.41M | 725.09M | 589.42M | Stockholders Equity |
| 2.91B | 1.42B | 849.37M | 915.76M | 914.14M |
| Cash Flow | Free Cash Flow | |||
| 244.25M | 143.79M | 137.12M | 150.86M | 137.44M | Operating Cash Flow |
| 244.25M | 154.77M | 144.41M | 156.87M | 145.74M | Investing Cash Flow |
| -1.51B | -267.81M | -127.40M | -192.63M | -41.58M | Financing Cash Flow |
| 1.19B | 394.32M | -23.73M | 36.74M | -105.56M |
CareTrust REIT Technical Analysis
Positive
28.41
Price Trends
26.91
Positive
27.16
Positive
27.74
Positive
Market Momentum
0.23
Positive
57.64
Neutral
66.03
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CTRE, the sentiment is Positive. The current price of 28.41 is above the 20-day moving average (MA) of 28.19, above the 50-day MA of 26.91, and above the 200-day MA of 27.74, indicating a bullish trend. The MACD of 0.23 indicates Positive momentum. The RSI at 57.64 is Neutral, neither overbought nor oversold. The STOCH value of 66.03 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CTRE.
CareTrust REIT Risk Analysis
CareTrust REIT disclosed 40 risk factors in its most recent earnings report. CareTrust REIT reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
CareTrust REIT Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $5.30B | 35.17 | 5.76% | 4.26% | 36.06% | 61.55% | |
77 Outperform | $3.45B | 23.67 | 10.53% | 4.94% | 4.88% | 0.41% | |
72 Outperform | $4.81B | ― | -2.14% | 3.34% | 11.17% | ― | |
63 Neutral | $4.20B | 32.90 | 4.57% | 6.79% | 7.22% | 809.92% | |
60 Neutral | $3.00B | 12.40 | 0.61% | 9872.56% | 7.62% | -2.59% | |
56 Neutral | $3.22B | ― | -38.69% | 7.28% | 14.19% | -331.18% | |
53 Neutral | $5.56B | ― | -10.95% | 7.83% | -5.62% | -140.10% |
* Real Estate Sector Average
Performance Comparison
CTRE
CareTrust REIT
28.41
5.94
26.44%
NHI
National Health Investors
74.61
18.64
33.30%
SBRA
Sabra Healthcare REIT
17.97
5.35
42.39%
MPW
Medical Properties
5.44
1.29
31.08%
HR
Healthcare Realty Trust
15.70
2.97
23.33%
AHR
American Healthcare REIT, Inc.
30.34
17.90
143.89%
CareTrust REIT Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: 12.38% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong financial performance and optimistic outlook for future growth, highlighting significant investment activity and robust financial metrics. However, potential political risks and uncertainties around key operators like PACS were noted, yet they do not seem to overshadow the overall positive momentum.Highlights
Robust Investment Activity
CareTrust completed new investments totaling just over $1.5 billion at an estimated stabilized yield of 9.7% in 2024. They finished the year with $700 million of new investments at an estimated stabilized yield of 9.9%, adding 81 triple net facilities to the portfolio.
Strong Financial Performance
Normalized FFO increased 68.1% to $72.9 million, and normalized FAD increased 63.7% to $74.3 million. On a per-share basis, normalized FFO increased 11.1% to $0.40 per share, and normalized FAD increased 10.8% to $0.41 per share.
Positive Outlook for Growth
CareTrust's guidance for 2025 includes normalized FFO per share growth of 12% to 14.6% and for normalized FAD per share growth of 11.8% to 14.4%. The company expressed optimism about the investment pipeline and future growth opportunities.
Lowlights
Potential Political Risks
There is uncertainty regarding Medicaid and Medicare policies with potential political changes; however, CareTrust believes there will be no significant negative impact on skilled nursing.
Concerns with PACS
Uncertainty remains around PACS, a key operator, due to current federal investigations, though CareTrust remains optimistic about their performance.
Company Guidance
During the CareTrust REIT fourth quarter 2024 earnings call, the company provided detailed guidance and performance metrics, highlighting a resilient fiscal outlook for 2025. They reported a significant $1.5 billion in investments at a stabilized yield of 9.7%, match funded with $1.5 billion of equity issuance. The company expects FFO per share growth of 12% to 14.6%, projecting normalized FFO per share between $1.68 and $1.72. Key financial figures included a 68.1% year-over-year increase in normalized FFO to $72.9 million and a 63.7% increase in normalized FAD to $74.3 million. Lease coverages remained strong with metrics such as 2.82 times EBITDARM and 2.21 times EBITDAR overall, and 3.02 times EBITDARM and 2.37 times EBITDAR for the top ten tenants. The company holds $180 million in cash and $1.2 billion available under a new revolver, maintaining a net debt to normalized EBITDA ratio of 0.5 times and a fixed charge coverage ratio of 17 times. With strategic investments and efficient capital management, CareTrust remains poised for continued growth in 2025.CareTrust REIT Corporate Events
M&A Transactions
CareTrust REIT Announces Acquisition of Care REIT plc
Positive
Mar 11, 2025
On March 11, 2025, CareTrust REIT, Inc. announced its intention to acquire Care REIT plc through its subsidiary CR United Bidco Limited for approximately $817 million. The acquisition, subject to court and shareholder approval, aims to capitalize on the fragmented UK care home market, driven by an aging population and limited new inventory. The acquisition has been unanimously approved by both companies’ boards and is expected to close in the second quarter of 2025.
Private Placements and FinancingDividendsBusiness Operations and StrategyFinancial Disclosures
CareTrust REIT Reports Strong 2024 Financial Performance
Positive
Feb 12, 2025
CareTrust REIT announced its operating results for the fourth quarter and full year of 2024, reporting significant financial achievements including investments of $696.5 million and a public stock offering yielding $507.8 million. The company also expanded its credit line and maintained a strong balance sheet with no outstanding borrowings. The results reflect a robust year with upgrades to investment-grade credit, a solid dividend payout, and a positive outlook for future growth opportunities.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.