CareTrust REIT: A Growing REIT That Deserves A Spot In Your Portfolio

Core Viewpoint - CareTrust REIT (NYSE:CTRE) is positioned for growth and is recommended for inclusion in investment portfolios due to its strong fundamentals and recent performance in the REIT sector [2][6]. Company Performance - CareTrust REIT has seen accelerated growth, closing over $200 million in new investments and expanding its operations from 24 to 30 states [6][7]. - The company reported Q1 revenue growth of over 5% to $63.07 million, exceeding estimates by more than $3 million, despite FFO remaining flat at $0.35 [8][22]. - Year-over-year revenue increased from approximately $51 million in Q1 2023 to $63 million in Q1 2024, marking a growth rate of nearly 24% [22]. Financial Health - CareTrust REIT has strong cash and liquidity levels, with $345 million in cash and $600 million available in a revolving credit facility, an increase from $300 million at the beginning of the year [12]. - The company has a low net debt to EBITDA ratio of 0.6x, significantly below the management's target range of 4x - 5x, indicating a favorable position for future acquisitions [26][27]. - The dividend payout ratio stands at 85%, with $41.2 million in paid dividends compared to $48.7 million in funds available for distribution, suggesting a safe dividend coverage [25]. Growth Potential - CareTrust REIT is expected to achieve an average earnings growth rate of 7.2% over the next three years, with a price target of $29, indicating an upside potential of approximately 18% [29]. - The company has a robust acquisition pipeline, with nearly $400 million in acquisitions made and additional acquisitions planned [20][21]. Market Position - CareTrust REIT has outperformed its peer Omega Health Investors (OHI), with a forward P/FFO ratio of 17.1x compared to OHI's 12.1x, reflecting a higher valuation due to its growth strategy [14].