When Should You Buy CareTrust REIT Inc (NASDAQ:CTRE)?

CareTrust REIT Inc (NASDAQ:CTRE), which is in the reits business, and is based in United States, saw a double-digit share price rise of over 10% in the past couple of months on the NasdaqGS. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at CareTrust REIT’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for CareTrust REIT

What’s the opportunity in CareTrust REIT?

The stock seems fairly valued at the moment according to my relative valuation model. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that CareTrust REIT’s ratio of 33.3x is trading slightly above its industry peers’ ratio of 29.24x, which means if you buy CareTrust REIT today, you’d be paying a relatively fair price for it. And if you believe CareTrust REIT should be trading in this range, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, it seems like CareTrust REIT’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from CareTrust REIT?

NasdaqGS:CTRE Future Profit November 22nd 18
NasdaqGS:CTRE Future Profit November 22nd 18
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. CareTrust REIT’s earnings over the next few years are expected to increase by 64%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in CTRE’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at CTRE? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on CTRE, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for CTRE, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on CareTrust REIT. You can find everything you need to know about CareTrust REIT in the latest infographic research report. If you are no longer interested in CareTrust REIT, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.