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Earnings Beat: CareTrust REIT, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Simply Wall St
·3 min read

CareTrust REIT, Inc. (NASDAQ:CTRE) just released its latest third-quarter results and things are looking bullish. CareTrust REIT beat earnings, with revenues hitting US$46m, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 17%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for CareTrust REIT

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Taking into account the latest results, the consensus forecast from CareTrust REIT's four analysts is for revenues of US$178.5m in 2021, which would reflect an okay 7.5% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 60% to US$0.82. In the lead-up to this report, the analysts had been modelling revenues of US$177.2m and earnings per share (EPS) of US$0.76 in 2021. So the consensus seems to have become somewhat more optimistic on CareTrust REIT's earnings potential following these results.

There's been no major changes to the consensus price target of US$20.56, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic CareTrust REIT analyst has a price target of US$22.00 per share, while the most pessimistic values it at US$19.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that CareTrust REIT's revenue growth will slow down substantially, with revenues next year expected to grow 7.5%, compared to a historical growth rate of 17% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.0% next year. Even after the forecast slowdown in growth, it seems obvious that CareTrust REIT is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards CareTrust REIT following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$20.56, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for CareTrust REIT going out to 2024, and you can see them free on our platform here.

Plus, you should also learn about the 3 warning signs we've spotted with CareTrust REIT .

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.