CareTrust REIT (NYSE:CTRE) Raises 2025 Earnings Guidance Following Care REIT plc Acquisition

CareTrust REIT (NYSE:CTRE) recently raised its earnings guidance for 2025, factoring in the acquisition of Care REIT plc, projecting a net income of $1.42 to $1.45 per share. This, combined with a robust Q1 2025 earnings report showing significant year-over-year revenue growth, likely influenced its 13% share price increase last quarter. Additionally, the company's dividend increase and strategic acquisitions in the U.S. supported positive market sentiment. Broader market trends, such as the global upswing following the U.S.-China tariff agreement, also added to the positive momentum seen in CareTrust REIT's performance.

Be aware that CareTrust REIT is showing 2 risks in our investment analysis and 1 of those is a bit concerning.

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The recent acquisition of Care REIT is expected to diversify CareTrust's portfolio and enhance U.K. market access, potentially driving revenue with an additional US$68.6 million in annual rents. This expansion aligns with the company's projected net income growth, further supported by the raised earnings guidance for 2025. Over the long term, CareTrust shares have delivered a total return of 101.75% over five years, reflecting robust performance and investor confidence. In comparison, CareTrust recently exceeded the broader U.S. market's 8% growth over the past year, but underperformed the U.S. Health Care REITs industry's 24.1% return, indicating mixed relative momentum.

The current valuation reflects this optimism, as the share price climbed 6.9% closer to the analyst consensus target. However, achieving the price target of US$31.67 by 2028 predicates on sustained revenue and earnings growth, which analysts expect to rise to US$686.7 million and US$410.2 million respectively. Potential risks include the impact of assuming US$259 million in Care REIT's debt, which may affect net margins. As such, the recent 13% share price increase positions the stock near its fair value, considering the PE ratio adjustments predicted by analysts.

The valuation report we've compiled suggests that CareTrust REIT's current price could be quite moderate.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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