Stock Analysis

Is There Now An Opportunity In Sienna Senior Living Inc. (TSE:SIA)?

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TSX:SIA
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Sienna Senior Living Inc. (TSE:SIA), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the TSX over the last few months, increasing to CA$14.14 at one point, and dropping to the lows of CA$12.22. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Sienna Senior Living's current trading price of CA$12.22 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Sienna Senior Living’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Sienna Senior Living

What Is Sienna Senior Living Worth?

According to my valuation model, Sienna Senior Living seems to be fairly priced at around 7.4% below my intrinsic value, which means if you buy Sienna Senior Living today, you’d be paying a fair price for it. And if you believe the company’s true value is CA$13.19, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Sienna Senior Living’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.

What does the future of Sienna Senior Living look like?

earnings-and-revenue-growth
TSX:SIA Earnings and Revenue Growth September 26th 2022

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. However, with a relatively muted revenue growth of 8.8% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Sienna Senior Living, at least in the short term.

What This Means For You

Are you a shareholder? SIA’s 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 tabs on SIA, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining 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 Sienna Senior Living at this point in time. When we did our research, we found 5 warning signs for Sienna Senior Living (3 can't be ignored!) that we believe deserve your full attention.

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

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