Brookdale Senior Living (BKD) shares have climbed steadily over the past few months, catching the attention of curious investors. The company’s recent gains invite a closer look at what might be driving interest at this time.
Brookdale Senior Living's share price momentum has been unmistakable, with an impressive 21.8% gain over the past 90 days and a year-to-date share price return of 83.2%. In addition, the company has delivered a three-year total shareholder return of over 112%. This suggests that optimism around the company’s turnaround and recovery is building, even before considering any long-term valuation questions.
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Given such strong recent gains, investors now face a crucial question: is Brookdale Senior Living currently undervalued, or has the rally already captured all the upside, leaving little room for further growth?
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Most Popular Narrative: 11.7% Overvalued
With Brookdale Senior Living’s fair value from the most-followed narrative set at $8.30, below the latest closing price of $9.27, analyst expectations are priced aggressively. This setup begs for a closer look at the assumptions fueling such a call.
Brookdale is benefiting from accelerating occupancy gains as a result of operational initiatives (such as local empowerment, focused SWAT teams, and targeted incentives), and with a large and growing share of communities above the 80% occupancy threshold, rising occupancy will increasingly fall to the bottom line due to fixed-cost leverage, driving meaningfully higher margins, EBITDA, and free cash flow over the next several years.
If you want the inside edge on why Brookdale’s future value is so hotly debated, look no further. The secret? A controversial blend of operational wins and big projected margin improvements, plus profit multiples more typical of high-flying sectors. The full narrative reveals the numbers behind this bullish outlook, and you may be surprised at how the analysts get there.
However, persistent labor shortages and ongoing reliance on targeted pricing incentives could still threaten Brookdale's margin expansion and future growth.
Another Perspective: SWS DCF Model Suggests Undervaluation
Looking past analyst price targets, our SWS DCF model offers a bolder view. It suggests Brookdale Senior Living could be undervalued by a wide margin, with a fair value estimate of $18.08 per share compared to the current market price of $9.27. This stark gap raises the question: Which measure is missing something?
If you see the story differently or want to dig into the numbers yourself, you can put together your own narrative in just a few minutes, so Do it your way.
A great starting point for your Brookdale Senior Living research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.
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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.
Valuation is complex, but we're here to simplify it.
Discover if Brookdale Senior Living might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
