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

While Chartwell Retirement Residences (TSE:CSH.UN) might not have the largest market cap around , it saw a double-digit share price rise of over 10% in the past couple of months on the TSX. The company is now trading at yearly-high levels following the recent surge in its share price. As a CA$2.8b market cap stock, it seems odd Chartwell Retirement Residences is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today we will analyse the most recent data on Chartwell Retirement Residences’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Chartwell Retirement Residences

What Is Chartwell Retirement Residences Worth?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 18.53% above our intrinsic value, which means if you buy Chartwell Retirement Residences today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth CA$9.74, then there isn’t really any room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Chartwell Retirement Residences’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

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 revenues expected to grow by a double-digit 22% over the next couple of years, the outlook is positive for Chartwell Retirement Residences. If the level of expenses is able to be maintained, 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 conviction to buy should the price fluctuates below the true 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 optimistic prospect 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. At Simply Wall St, we found 2 warning signs for Chartwell Retirement Residences and we think they deserve your attention.

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.