CareTrust REIT, Inc. (NYSE: CTRE)

Sector: Real Estate Industry: REIT - Healthcare Facilities CIK: 0001590717
Market Cap 8.40 Bn
P/B 2.08
P/E 26.19
P/S 17.62
ROIC (Qtr) 6.33
Div Yield % 3.26
Rev 1y % (Qtr) 55.11
Total Debt (Qtr) 894.22 Mn
Debt/Equity (Qtr) 0.22
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About

CareTrust REIT, Inc., a self-administered, publicly-traded real estate investment trust (REIT), specializes in the ownership, acquisition, financing, development, and leasing of skilled nursing, seniors housing, and other healthcare-related properties. Operating within the healthcare real estate industry, CareTrust REIT's primary business activities involve leasing its properties to healthcare operators under long-term, triple-net leases. This arrangement ensures that operators are responsible for all facility maintenance and repair, insurance,...

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Investment thesis

Bull case

  • Strong operating cash flow of 394.03M provides robust 0.44x coverage of total debt 894.22M, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 394.03M provides strong 33.12x coverage of stock compensation 11.90M, indicating sustainable incentive practices.
  • Strong tangible asset base of 5.15B provides 5.76x coverage of total debt 894.22M, indicating robust asset backing and low credit risk.
  • Strong operating cash flow of 394.03M provides 7.51x coverage of SG&A expenses 52.47M, showing efficient operational cost management.
  • Free cash flow of (1.10B) provides excellent 4.24x coverage of dividends (259.35M), indicating sustainable shareholder returns.

Bear case

  • Operating cash flow of 394.03M barely covers its investment activities of (1.46B), with a coverage ratio of -0.27, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 394.03M provides thin coverage of dividend payments of (259.35M) with a -1.52 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of (1.10B) provides weak coverage of capital expenditures of 1.49B, with a -0.74 ratio suggesting additional external financing needs for growth initiatives.
  • Free cash flow of (1.10B) represents just -4.59x of debt issuance 239.22M, suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of 394.03M shows concerning coverage of minority interest expenses of (252000), which is -1563.61x, suggesting complex corporate structure risks.

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the REIT - Healthcare Facilities
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 WELL Welltower Inc. 143.17 Bn 152.82 13.21 21.38 Bn
2 VTR Ventas, Inc. 38.32 Bn 152.44 6.57 13.22 Bn
3 OHI Omega Healthcare Investors Inc 9.79 Bn 37.42 11.00 4.26 Bn
4 DOC Healthpeak Properties, Inc. 9.29 Bn 18.52 5.20 10.14 Bn
5 CTRE CareTrust REIT, Inc. 8.40 Bn 26.19 17.62 0.89 Bn
6 AHR American Healthcare REIT, Inc. 6.95 Bn -212.00 3.23 1.70 Bn
7 HR Healthcare Realty Trust Inc 6.42 Bn -26.10 5.44 4.15 Bn
8 NHI National Health Investors Inc 2.58 Bn 24.34 21.93 1.11 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.67 1.24
EV to Cash from Ops. EV/CFO 21.77 24.29
EV to Debt EV to Debt 9.59 3.18
EV to EBIT EV/EBIT 23.23 14.77
EV to EBITDA EV/EBITDA 20.96 19.20
EV to Free Cash Flow [EV/FCF] EV/FCF -7.80 1.78
EV to Market Cap EV to Market Cap 1.02 1.96
EV to Revenue EV/Rev 18.00 11.43
Price to Book Value [P/B] P/B 2.08 2.64
Price to Earnings [P/E] P/E 26.19 29.39
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.24 -1.90
Dividend Payout Ratio % Div Payout % (Qtr) 85.40 299.46
Dividend per Basic Share Div per Share (Qtr) 1.34 1.85
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -24.82 49.00
Interest Coverage Int. cover (Qtr) 8.45 2.08
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -80.95 -326.40
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -7.38 31.24
Dividend Growth (1y) % Div 1y % (Qtr) 15.52 12.81
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 133.97 35.66
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 61.99 12.40
EBIT Growth (1y) % EBIT 1y % (Qtr) 137.63 25.81
EBT Growth (1y) % EBT 1y % (Qtr) 160.26 71.96
EPS Growth (1y) % EPS 1y % (Qtr) 93.83 29.36
FCF Growth (1y) % FCF 1y % (Qtr) -89.20 -181.35
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 63.67 13.29
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.09 0.17
Cash Payout Ratio Cash Payout (Qtr) 0.14 0.07
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.00
Debt to Equity Ratio Debt/Equity (Qtr) 0.22 4.36
Interest Cover Ratio Int Coverage (Qtr) 8.45 2.08
Times Interest Earned Times Interest Earned (Qtr) 8.45 2.08
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 97.00 55.93
EBIT Margin % EBIT Margin % (Qtr) 77.51 28.99
EBT Margin % EBT Margin % (Qtr) 68.33 13.55
Gross Margin % Gross Margin % (Qtr) 99.80 71.26
Net Profit Margin % Net Margin % (Qtr) 67.30 13.18