Critical Survey: CareTrust REIT (CTRE) and Its Competitors

CareTrust REIT (NASDAQ: CTRE) is one of 26 publicly-traded companies in the “Healthcare REITs” industry, but how does it compare to its rivals? We will compare CareTrust REIT to similar companies based on the strength of its valuation, analyst recommendations, profitability, risk, institutional ownership, dividends and earnings.

Risk & Volatility

CareTrust REIT has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500. Comparatively, CareTrust REIT’s rivals have a beta of 0.49, suggesting that their average share price is 51% less volatile than the S&P 500.

Profitability

This table compares CareTrust REIT and its rivals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CareTrust REIT 24.02% 5.76% 3.03%
CareTrust REIT Competitors 38.21% 8.11% 4.09%

Institutional and Insider Ownership

89.4% of CareTrust REIT shares are owned by institutional investors. Comparatively, 84.2% of shares of all “Healthcare REITs” companies are owned by institutional investors. 1.6% of CareTrust REIT shares are owned by insiders. Comparatively, 1.9% of shares of all “Healthcare REITs” companies are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

CareTrust REIT pays an annual dividend of $0.74 per share and has a dividend yield of 3.9%. CareTrust REIT pays out 164.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Healthcare REITs” companies pay a dividend yield of 5.2% and pay out 125.2% of their earnings in the form of a dividend. CareTrust REIT lags its rivals as a dividend stock, given its lower dividend yield and higher payout ratio.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for CareTrust REIT and its rivals, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CareTrust REIT 0 4 3 0 2.43
CareTrust REIT Competitors 128 709 642 12 2.36

CareTrust REIT presently has a consensus target price of $18.33, suggesting a potential downside of 3.20%. As a group, “Healthcare REITs” companies have a potential upside of 4.79%. Given CareTrust REIT’s rivals higher probable upside, analysts clearly believe CareTrust REIT has less favorable growth aspects than its rivals.

Earnings and Valuation

This table compares CareTrust REIT and its rivals gross revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
CareTrust REIT $118.79 million $96.91 million 42.09
CareTrust REIT Competitors $788.38 million $482.52 million 39.20

CareTrust REIT’s rivals have higher revenue and earnings than CareTrust REIT. CareTrust REIT is trading at a higher price-to-earnings ratio than its rivals, indicating that it is currently more expensive than other companies in its industry.

Summary

CareTrust REIT rivals beat CareTrust REIT on 12 of the 15 factors compared.

CareTrust REIT Company Profile

CareTrust REIT, Inc. is a self-administered, self-managed real estate investment trust. The Company is engaged in the ownership, acquisition and leasing of healthcare-related properties. It makes investments in healthcare-related real estate assets. As of December 31, 2016, its real estate portfolio included 154 skilled nursing facilities (SNFs), SNF Campuses, assisted living facilities and independent living facilities. As of December 31, 2016, the 93 facilities leased to The Ensign Group, Inc. had a total of 9,916 beds and units and are located in Arizona, California, Colorado, Idaho, Iowa, Nebraska, Nevada, Texas, Utah and Washington; the 16 facilities leased to affiliates of Pristine Senior Living, LLC had a total of 1,488 beds and units; and the 42 remaining leased properties had a total of 3,515 beds and units and are located in California, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Maryland, Michigan, Minnesota, North Carolina, Texas, Virginia, Washington and Wisconsin.

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