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Does EPR Properties (NYSE:EPR) Have A Particularly Volatile Share Price?

Simply Wall St
·4 min read

If you're interested in EPR Properties (NYSE:EPR), then you might want to consider its beta (a measure of share price volatility) in order to understand how the stock could impact your portfolio. Modern finance theory considers volatility to be a measure of risk, and there are two main types of price volatility. The first type is company specific volatility. Investors use diversification across uncorrelated stocks to reduce this kind of price volatility across the portfolio. The other type, which cannot be diversified away, is the volatility of the entire market. Every stock in the market is exposed to this volatility, which is linked to the fact that stocks prices are correlated in an efficient market.

Some stocks see their prices move in concert with the market. Others tend towards stronger, gentler or unrelated price movements. Beta is a widely used metric to measure a stock's exposure to market risk (volatility). Before we go on, it's worth noting that Warren Buffett pointed out in his 2014 letter to shareholders that 'volatility is far from synonymous with risk.' Having said that, beta can still be rather useful. The first thing to understand about beta is that the beta of the overall market is one. Any stock with a beta of greater than one is considered more volatile than the market, while those with a beta below one are either less volatile or poorly correlated with the market.

See our latest analysis for EPR Properties

What does EPR's beta value mean to investors?

Given that it has a beta of 1.43, we can surmise that the EPR Properties share price has been fairly sensitive to market volatility (over the last 5 years). Based on this history, investors should be aware that EPR Properties are likely to rise strongly in times of greed, but sell off in times of fear. Beta is worth considering, but it's also important to consider whether EPR Properties is growing earnings and revenue. You can take a look for yourself, below.

NYSE:EPR Income Statement April 8th 2020
NYSE:EPR Income Statement April 8th 2020

How does EPR's size impact its beta?

EPR Properties is a small cap stock with a market capitalisation of US$1.7b. Most companies this size are actively traded. It is quite common to see a small-cap stock with a beta greater than one. In part, that's because relatively few investors can influence the price of a smaller company, compared to a large company.

What this means for you:

Since EPR Properties has a reasonably high beta, it's worth considering why it is so heavily influenced by broader market sentiment. For example, it might be a high growth stock or have a lot of operating leverage in its business model. This article aims to educate investors about beta values, but it's well worth looking at important company-specific fundamentals such as EPR Properties’s financial health and performance track record. I highly recommend you dive deeper by considering the following:

  1. Future Outlook: What are well-informed industry analysts predicting for EPR’s future growth? Take a look at our free research report of analyst consensus for EPR’s outlook.

  2. Past Track Record: Has EPR been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of EPR's historicals for more clarity.

  3. Other Interesting Stocks: It's worth checking to see how EPR measures up against other companies on valuation. You could start with this free list of prospective options.

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.

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. Thank you for reading.