Brookdale Senior Living Inc (NYSE:BKD), a healthcare company based in United States, led the NYSE gainers with a relatively large price hike in the past couple of weeks. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Brookdale Senior Living’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. View out our latest analysis for Brookdale Senior Living
What is Brookdale Senior Living worth?
Brookdale Senior Living appears to be overvalued by 98.08% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$9.40 on the market compared to my intrinsic value of $4.75. This means that the opportunity to buy Brookdale Senior Living at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Brookdale Senior Living’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What does the future of Brookdale Senior Living look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. Brookdale Senior Living’s earnings over the next few years are expected to increase by 84.76%, 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? BKD’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe BKD should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on BKD for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for BKD, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Brookdale Senior Living. You can find everything you need to know about Brookdale Senior Living in the latest infographic research report. If you are no longer interested in Brookdale Senior Living, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.