CareTrust REIT Current Financial Leverage
| CTRE Stock | USD 23.81 0.09 0.38% |
CareTrust REIT holds a debt-to-equity ratio of 0.953. At present, CareTrust REIT's Short and Long Term Debt is projected to decrease significantly based on the last few years of reporting. The current year's Interest Debt Per Share is expected to grow to 9.64, whereas Short and Long Term Debt Total is forecasted to decline to about 559.9 M. CareTrust REIT's financial risk is the risk to CareTrust REIT stockholders that is caused by an increase in debt. In other words, with a high degree of financial leverage come high-interest payments, which usually reduce Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
CareTrust REIT's liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. CareTrust REIT's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Company is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps CareTrust Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect CareTrust REIT's stakeholders.
CareTrust REIT Quarterly Net Debt |
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For most companies, including CareTrust REIT, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running CareTrust REIT the most critical issue when dealing with liquidity needs is whether the current assets are properly aligned with its current liabilities. If not, management will need to obtain alternative financing to ensure that there are always enough cash equivalents on the balance sheet in reserve to pay for obligations.
Price Book 2.2543 | Book Value 10.899 | Operating Margin 0.6315 | Profit Margin 0.2468 | Return On Assets 0.0456 |
Given that CareTrust REIT's debt-to-equity ratio measures a Company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which CareTrust REIT is acquiring new debt as a mechanism of leveraging its assets. A high debt-to-equity ratio is generally associated with increased risk, implying that it has been aggressive in financing its growth with debt. Another way to look at debt-to-equity ratios is to compare the overall debt load of CareTrust REIT to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, CareTrust REIT is said to be less leveraged. If creditors hold a majority of CareTrust REIT's assets, the Company is said to be highly leveraged.
At present, CareTrust REIT's Short and Long Term Debt is projected to decrease significantly based on the last few years of reporting. The current year's Interest Debt Per Share is expected to grow to 9.64, whereas Short and Long Term Debt Total is forecasted to decline to about 559.9 M. CareTrust |
CareTrust REIT Financial Leverage Rating
CareTrust REIT bond ratings play a critical role in determining how much CareTrust REIT have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for CareTrust REIT's borrowing costs.| Piotroski F Score | 7 Strong |
| Beneish M Score | -3.06 Unlikely Manipulator |
CareTrust REIT Debt to Cash Allocation
As CareTrust REIT follows its natural business cycle, the capital allocation decisions will not magically go away. CareTrust REIT's decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors. Many companies eventually find out that there is only so much market out there to be conquered, and adding the next product or service is only half as profitable per unit as their current endeavors. Eventually, the company will reach a point where cash flows are strong, and extra cash is available but not fully utilized. In this case, the company may start buying back its stock from the public or issue more dividends.
The company currently holds 595.6 M in liabilities with Debt to Equity (D/E) ratio of 0.95, which is about average as compared to similar companies. CareTrust REIT has a current ratio of 3.63, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist CareTrust REIT until it has trouble settling it off, either with new capital or with free cash flow. So, CareTrust REIT's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like CareTrust REIT sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for CareTrust to invest in growth at high rates of return. When we think about CareTrust REIT's use of debt, we should always consider it together with cash and equity.CareTrust REIT Common Stock Shares Outstanding Over Time
CareTrust REIT Assets Financed by Debt
Typically, companies with high debt-to-asset ratios are said to be highly leveraged. The higher the ratio, the greater risk will be associated with the CareTrust REIT's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of CareTrust REIT, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a CareTrust REIT debt ratio should be compared their industry average or other competing firms.CareTrust Long Term Debt
Long Term Debt |
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Understaning CareTrust REIT Use of Financial Leverage
CareTrust REIT financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures CareTrust REIT's total debt position, including all of outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of CareTrust REIT assets, the company is considered highly leveraged. Understanding the composition and structure of overall CareTrust REIT debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business and if it is worth investing in it. Financial leverage can amplify the potential profits to CareTrust REIT's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of CareTrust REIT's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
| Last Reported | Projected for Next Year | ||
| Long Term Debt | 595.6 M | 416.8 M | |
| Short and Long Term Debt Total | 595.6 M | 559.9 M | |
| Net Debt | 301.1 M | 514.3 M | |
| Short and Long Term Debt | 112.5 M | 192.3 M | |
| Short Term Debt | 112.5 M | 94.7 M | |
| Long Term Debt Total | 683.7 M | 369.1 M | |
| Net Debt To EBITDA | 1.62 | 1.54 | |
| Debt To Equity | 0.42 | 0.40 | |
| Interest Debt Per Share | 6.00 | 9.64 | |
| Debt To Assets | 0.29 | 0.52 | |
| Long Term Debt To Capitalization | 0.30 | 0.50 | |
| Total Debt To Capitalization | 0.30 | 0.53 | |
| Debt Equity Ratio | 0.42 | 0.40 | |
| Debt Ratio | 0.29 | 0.52 | |
| Cash Flow To Debt Ratio | 0.26 | 0.14 |
CareTrust REIT Investors Sentiment
The influence of CareTrust REIT's investor sentiment on the probability of its price appreciation or decline could be a good factor in your decision-making process regarding taking a position in CareTrust. The overall investor sentiment generally increases the direction of a stock movement in a one-year investment horizon. However, the impact of investor sentiment on the entire stock market does not have solid backing from leading economists and market statisticians.
Investor biases related to CareTrust REIT's public news can be used to forecast risks associated with an investment in CareTrust. The trend in average sentiment can be used to explain how an investor holding CareTrust can time the market purely based on public headlines and social activities around CareTrust REIT. Please note that most equities that are difficult to arbitrage are affected by market sentiment the most.
CareTrust REIT's market sentiment shows the aggregated news analyzed to detect positive and negative mentions from the text and comments. The data is normalized to provide daily scores for CareTrust REIT's and other traded tickers. The bigger the bubble, the more accurate is the estimated score. Higher bars for a given day show more participation in the average CareTrust REIT's news discussions. The higher the estimated score, the more favorable is the investor's outlook on CareTrust REIT.
Some investors attempt to determine whether the market's mood is bullish or bearish by monitoring changes in market sentiment. Unlike more traditional methods such as technical analysis, investor sentiment usually refers to the aggregate attitude towards CareTrust REIT in the overall investment community. So, suppose investors can accurately measure the market's sentiment. In that case, they can use it for their benefit. For example, some tools to gauge market sentiment could be utilized using contrarian indexes, CareTrust REIT's short interest history, or implied volatility extrapolated from CareTrust REIT options trading.
Pair Trading with CareTrust REIT
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if CareTrust REIT position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CareTrust REIT will appreciate offsetting losses from the drop in the long position's value.Moving against CareTrust Stock
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The ability to find closely correlated positions to CareTrust REIT could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace CareTrust REIT when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back CareTrust REIT - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling CareTrust REIT to buy it.
The correlation of CareTrust REIT is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as CareTrust REIT moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if CareTrust REIT moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for CareTrust REIT can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.Check out the analysis of CareTrust REIT Fundamentals Over Time. For information on how to trade CareTrust Stock refer to our How to Trade CareTrust Stock guide.You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Complementary Tools for CareTrust Stock analysis
When running CareTrust REIT's price analysis, check to measure CareTrust REIT's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy CareTrust REIT is operating at the current time. Most of CareTrust REIT's value examination focuses on studying past and present price action to predict the probability of CareTrust REIT's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move CareTrust REIT's price. Additionally, you may evaluate how the addition of CareTrust REIT to your portfolios can decrease your overall portfolio volatility.
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Is CareTrust REIT's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of CareTrust REIT. If investors know CareTrust will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about CareTrust REIT listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth 0.449 | Dividend Share 1.12 | Earnings Share 0.51 | Revenue Per Share 2.055 | Quarterly Revenue Growth 0.153 |
The market value of CareTrust REIT is measured differently than its book value, which is the value of CareTrust that is recorded on the company's balance sheet. Investors also form their own opinion of CareTrust REIT's value that differs from its market value or its book value, called intrinsic value, which is CareTrust REIT's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because CareTrust REIT's market value can be influenced by many factors that don't directly affect CareTrust REIT's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between CareTrust REIT's value and its price as these two are different measures arrived at by different means. Investors typically determine if CareTrust REIT is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, CareTrust REIT's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
What is Financial Leverage?
Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.Leverage and Capital Costs
The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.Benefits of Financial Leverage
Leverage provides the following benefits for companies:- Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
- It provides a variety of financing sources by which the firm can achieve its target earnings.
- Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.