When Should You Buy Chartwell Retirement Residences (TSE:CSH.UN)?

Chartwell Retirement Residences (TSE:CSH.UN), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the TSX. As a well-established company, which tends to be well-covered by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine Chartwell Retirement Residences’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Chartwell Retirement Residences

What is Chartwell Retirement Residences worth?

According to my valuation model, Chartwell Retirement Residences seems to be fairly priced at around 14.48% above my intrinsic value, which means if you buy Chartwell Retirement Residences today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth CA$10.72, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Chartwell Retirement Residences’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Chartwell Retirement Residences?

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. 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 flow 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 around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on CSH.UN, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Chartwell Retirement Residences at this point in time. Case in point: We've spotted 4 warning signs for Chartwell Retirement Residences you should be mindful of and 1 of these is significant.

If you are no longer interested in Chartwell Retirement Residences, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St 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. Simply Wall St has no position in any stocks mentioned.