Stock Analysis

What Does Sienna Senior Living Inc.'s (TSE:SIA) Share Price Indicate?

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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 saw a double-digit share price rise of over 10% in the past couple of months on the TSX. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Sienna Senior Living’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Sienna Senior Living

Is Sienna Senior Living still cheap?

According to my valuation model, the stock is currently overvalued by about 39%, trading at CA$14.27 compared to my intrinsic value of CA$10.25. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since Sienna 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.

Can we expect growth from Sienna Senior Living?

earnings-and-revenue-growth
TSX:SIA Earnings and Revenue Growth March 18th 2021

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. Though in the case of Sienna Senior Living, it is expected to deliver a relatively unexciting top-line growth of 4.6% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in SIA’s future outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe SIA 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 SIA 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 means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example, Sienna Senior Living has 3 warning signs (and 2 which are concerning) we think you should know about.

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