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Is CareTrust REIT, Inc. (NASDAQ:CTRE) Potentially Undervalued?

Simply Wall St

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CareTrust REIT, Inc. (NASDAQ:CTRE), which is in the reits business, and is based in United States, maintained its current share price over the past couple of month on the NASDAQGS, with a relatively tight range of $23.08 to $25.32. However, does this price actually reflect the true value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at CareTrust REIT’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for CareTrust REIT

What's the opportunity in CareTrust REIT?

Good news, investors! CareTrust REIT is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $47.51, but it is currently trading at US$23.82 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, CareTrust REIT’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. 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 Past and Future Earnings, July 16th 2019

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. 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? Since CTRE is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on CTRE for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy CTRE. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.