Do the Benefits of CareTrust REIT (NASDAQ: CTRE) Worth Your Attention?
Some have more dollars than they make sense, they say, so even companies that have no income, no profits, and have failed to find investors can easily find investors. And in their study entitled Who is the prey of the Wolf of Wall Street? Leuz and. Al. Found that it is “quite common” for investors to lose money by buying into “pump and dump” programs.
Contrary to all that, I prefer to spend time on companies like CareTrust REIT (NASDAQ: CTRE), which not only has income, but also profits. While profit isn’t necessarily social good, it’s easy to admire a business that can consistently produce it. Conversely, a loss-making company has not yet proven itself in terms of profit, and eventually the sweet milk of external capital can turn sour.
Check out our latest review for CareTrust REIT
How fast is CareTrust REIT growing?
If a company can continue to increase its earnings per share (EPS) long enough, its stock price will eventually follow. This means that growing EPS is seen as a real benefit by most successful long-term investors. Impressively, CareTrust REIT has increased BPA by 29% per year, compound, over the past three years. If the company can support this kind of growth, we expect shareholders to come out ahead.
I like to look at earnings before interest and tax margins (EBIT), as well as revenue growth, to get another perspective on how well the business is growing. I note that last year CareTrust REIT income operations was lower than its revenues, which could skew my analysis of its margins. The good news is that CareTrust REIT is increasing revenue and EBIT margins have improved 3.3 percentage points to 58% in the past year. It’s great to see, on both counts.
You can check out the revenue and profit growth trend of the company in the chart below. To see the actual numbers, click on the graph.
Although we are living in the present moment all the time, there is no doubt in my mind that the future matters more than the past. So why not check out this interactive graph showing future EPS estimates for CareTrust REIT?
Are CareTrust REIT Insiders Aligned with All Shareholders?
I like that business leaders have some skin in the game, so to speak, because it increases the alignment of incentives between the people who run the business and its real owners. Therefore, I am encouraged that insiders are holding CareTrust REIT shares of considerable value. Indeed, they hold US $ 43 million of its shares. It’s a lot of money and it’s no small incentive to work hard. Although he only represents 1.9% of the business, the value of this investment is enough to show that insiders have a lot going on in the business.
Is CareTrust REIT worth watching?
You cannot deny that CareTrust REIT has increased its earnings per share at a very impressive rate. It is attractive. I think the growth in BPA is something to brag about, and it doesn’t surprise me that insiders keep a hefty share of stocks. Rapid growth and confident insiders should be enough to warrant further research. So the answer is, I think it’s a good stock to follow. It should be noted, however, that we have found 2 warning signs for CareTrust REIT that you need to take into consideration.
Of course, you can (sometimes) buy stocks that are not increased income and do not have insiders who buy stocks. But as a growth investor, I always like to check out companies that do have these characteristics. You can access a free list of them here.
Please note that the insider trading described in this article refers to reportable trades in the relevant jurisdiction.
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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take into account your goals or your financial situation. We aim to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative information. Simply Wall St does not have any position in the mentioned stocks.
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