Value
3.7/10data confidence 67%| Component | Sub-score |
|---|---|
| P/S | 0.0 |
| EV/EBITDA | 0.0 |
| p ocf | 5.4 |
| Analyst target | 5.0 |
- ▸P/OCF: 20.4x (FFO proxy — REITs gated off P/E)
CTRE · Why this verdict
Why CareTrust REIT (CTRE) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.2/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
A healthcare REIT with genuinely exceptional quality — 9/9 Piotroski F-Score, 64% margins, and free cash flow at 288% of net income — is overshadowed by four consecutive earnings misses, weak single-digit growth, a dividend yield safety warning, and heavy bearish options positioning (put/call ratio of 2.44), leaving the overall setup cautious despite strong analyst conviction and oversold technicals.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Analysts see 23% upside to the consensus target from the current price, and recent news sentiment is positive — reflecting research community confidence in the business despite near-term earnings noise. Sentiment | Analyst targets hold and price gradually closes the gap toward the 23% upside over the next 12 months. | ↑Improving |
| CounterThe near-term take-profit level is only 6.7% above the current price, meaning the risk/reward at the next resistance level remains thin even if the longer-term analyst target is compelling. | ||
The business generates free cash flow equal to 288% of net income, posts 64% margins, and holds a perfect Piotroski F-Score of 9/9, placing it among the best-in-class names in its peer group on quality metrics. Quality | Cash generation and margins remain near current levels, sustaining the quality designation over the next four quarters. | ↓Deteriorating |
| CounterDespite exceptional cash and quality metrics, four consecutive quarterly misses and a dividend yield safety warning indicate the payout may be at risk — an uncovered dividend would undermine the quality case for income-oriented investors. | ||
The company has missed earnings estimates in all four of the most recent reported quarters, with the oldest miss at -15.7% and the most recent narrowing sharply to -1.3%, suggesting analysts are gradually resetting expectations toward actual results. Earnings | The miss streak ends with the next quarterly report as the narrowing trajectory reaches breakeven and the company delivers an in-line or better result. | ↑Improving |
| CounterEven a four-quarter miss streak with narrowing gaps may persist if the business faces structural headwinds to meeting consensus targets, and each additional miss reinforces negative sentiment among institutional holders. | ||
RSI is near 20 (oversold), on-balance volume is rising (accumulation), and the stock remains above the 200-day moving average — a combination that creates a potential mean-reversion setup within an intact longer-term uptrend. Momentum | Price mean-reverts from the oversold reading and advances toward the analyst consensus target as technical conditions normalize. | ↓Deteriorating |
| CounterShort interest of 10% and a put/call ratio of 2.44 indicate substantial bearish positioning that can overwhelm technical oversold signals, keeping the stock depressed even while the longer-term trend remains intact. | ||
Revenue and earnings growth are both running in the low single digits, placing this company near the bottom of its peer group on growth metrics and reducing the likelihood of a meaningful re-rating catalyst. Growth | Quarterly EPS exceeds $0.40 for 2 consecutive quarters, indicating an acceleration above the current $0.36 run rate. | →Stable |
| CounterBest-in-class cash conversion at 288% of net income means that even modest revenue growth generates disproportionate cash flow, which can support distributions and buybacks without requiring rapid top-line expansion. | ||
Analysts see 23% upside to the consensus target from the current price, and recent news sentiment is positive — reflecting research community confidence in the business despite near-term earnings noise.
↑ImprovingSentiment
- Expectation
- Analyst targets hold and price gradually closes the gap toward the 23% upside over the next 12 months.
CounterThe near-term take-profit level is only 6.7% above the current price, meaning the risk/reward at the next resistance level remains thin even if the longer-term analyst target is compelling.
The business generates free cash flow equal to 288% of net income, posts 64% margins, and holds a perfect Piotroski F-Score of 9/9, placing it among the best-in-class names in its peer group on quality metrics.
↓DeterioratingQuality
- Expectation
- Cash generation and margins remain near current levels, sustaining the quality designation over the next four quarters.
CounterDespite exceptional cash and quality metrics, four consecutive quarterly misses and a dividend yield safety warning indicate the payout may be at risk — an uncovered dividend would undermine the quality case for income-oriented investors.
The company has missed earnings estimates in all four of the most recent reported quarters, with the oldest miss at -15.7% and the most recent narrowing sharply to -1.3%, suggesting analysts are gradually resetting expectations toward actual results.
↑ImprovingEarnings
- Expectation
- The miss streak ends with the next quarterly report as the narrowing trajectory reaches breakeven and the company delivers an in-line or better result.
CounterEven a four-quarter miss streak with narrowing gaps may persist if the business faces structural headwinds to meeting consensus targets, and each additional miss reinforces negative sentiment among institutional holders.
RSI is near 20 (oversold), on-balance volume is rising (accumulation), and the stock remains above the 200-day moving average — a combination that creates a potential mean-reversion setup within an intact longer-term uptrend.
↓DeterioratingMomentum
- Expectation
- Price mean-reverts from the oversold reading and advances toward the analyst consensus target as technical conditions normalize.
CounterShort interest of 10% and a put/call ratio of 2.44 indicate substantial bearish positioning that can overwhelm technical oversold signals, keeping the stock depressed even while the longer-term trend remains intact.
Revenue and earnings growth are both running in the low single digits, placing this company near the bottom of its peer group on growth metrics and reducing the likelihood of a meaningful re-rating catalyst.
→StableGrowth
- Expectation
- Quarterly EPS exceeds $0.40 for 2 consecutive quarters, indicating an acceleration above the current $0.36 run rate.
CounterBest-in-class cash conversion at 288% of net income means that even modest revenue growth generates disproportionate cash flow, which can support distributions and buybacks without requiring rapid top-line expansion.
Per-dimension breakdown
Quality
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.0 |
| ROA | 3.0 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 9.7 |
| FCF quality | 0.0 |
| Moat | 6.0 |
| Rule of 40 | 3.0 |
| Piotroski F | 10.0 |
- ▸Strong margins: 62%
- ▸Earnings quality RED FLAG: -23% FCF/NI
- ▸Rule of 40: -11 (fail)
- ▸Strong Piotroski F-Score: 9/9
Growth
3.1/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.3 |
| EPS growth | 3.0 |
Momentum
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.1 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 3.7 |
- ▸Oversold in uptrend (RSI 28)
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.6 |
| Analyst rating | 8.5 |
| Price target | 7.2 |
- ▸LLM news sentiment: +0.32 (n=4)
Insider
7.1/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 9.3 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.5 |
| quality rank | 7.5 |
| growth rank | 4.4 |
- ▸Best-in-class margins
Technical
8.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 10.0 |
| support resistance | 8.6 |
| 52w position | 8.0 |
Risk (lower is worse)
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 3.9 |
| days to cover | 0.0 |
| volatility | 6.1 |
| put call | 0.0 |
| implied vol | 3.9 |
| beta | 8.2 |
| debt equity | 6.7 |
- ▸Elevated put/call: 3.60
Catalyst
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 2.0 |
| news activity | 8.0 |
- ▸Earnings concerns: 0B/3M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- INSIDER:OK
- 8K:CLEAN
- NEWS_BOOST:EARNINGS:0.60
- NEWS_BOOST:ANALYST:0.40
- EARNINGS_PROXIMITY:89d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.4<4.5
- ASYMMETRY:0.2<1.5@spot
Warning (0)
none
Reward-to-Risk
0.16
Upside
+0.8%
Downside
5.1%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.2 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Technical at 8.9) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.4<4.5, ASYMMETRY:0.2<1.5@spot) reinforce the read. Current asymmetry R:R is 0.16 — supplementary context, not the trigger for this path.
The strongest dimensions are Technical at 8.9, Sentiment at 7.5, and Insider at 7.1; the weakest are Growth at 3.1, Catalyst at 3.3, and Momentum at 3.4. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 0.16 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Quality Cash Conversion
Trip ifFree cash flow as a percentage of net income falls below 150% for 2 consecutive quarters, signaling deterioration in cash conversion quality.
- P2Four Quarter Earnings Miss Streak
Trip ifEPS surprise exceeds 3% for 2 consecutive quarters, confirming the miss streak has reversed.
- P3Oversold In Ongoing Uptrend
Trip ifPrice falls below the 200-day moving average for 2 consecutive weeks, breaking the longer-term uptrend.
- P4Strong Analyst Upside Conviction
Trip ifAnalyst upside to the consensus price target falls below 8% as targets are cut, indicating a meaningful reduction in conviction.
- P5Weak Growth Limits Rerating
Trip ifQuarterly EPS exceeds $0.40 for 2 consecutive quarters, indicating acceleration above the current $0.36 run rate.