Stock Analysis

Is It Time To Buy Chartwell Retirement Residences (TSE:CSH.UN)?

TSX:CSH.UN
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Chartwell Retirement Residences (TSX:CSH.UN), a healthcare company based in Canada, saw its share price hover around a small range of CA$14.8 to CA$15.97 over the last few weeks. But is this actually reflective of the share value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Chartwell Retirement Residences’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Chartwell Retirement Residences

What's the opportunity in Chartwell Retirement Residences?

According to my relative valuation model, the stock is currently overvalued. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Chartwell Retirement Residences’s ratio of 246x is above its peer average of 23.92x, which suggests the stock is overvalued compared to the Healthcare industry. In addition to this, it seems like Chartwell Retirement Residences’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Chartwell Retirement Residences generate?

TSX:CSH.UN Future Profit Apr 9th 18
TSX:CSH.UN Future Profit Apr 9th 18
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to more than double over the next couple of years, the future seems bright for Chartwell Retirement Residences. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? CSH.UN’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe CSH.UN 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 CSH.UN for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for CSH.UN, 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 Chartwell Retirement Residences. You can find everything you need to know about Chartwell Retirement Residences in the latest infographic research report. If you are no longer interested in Chartwell Retirement Residences, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

Valuation is complex, but we're helping make it simple.

Find out whether Chartwell Retirement Residences is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.