Brookdale Senior Living Inc (NYSE:BKD), a healthcare company based in United States, received a lot of attention from a substantial price movement on the NYSE in the over the last few months, increasing to $10.26 at one point, and dropping to the lows of $6.5. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Brookdale Senior Living’s current trading price of $6.67 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 Brookdale Senior Living’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Brookdale Senior Living
What’s the opportunity in Brookdale Senior Living?According to my valuation model, the stock is currently overvalued by about 26%, trading at US$6.67 compared to my intrinsic value of $5.29. This means that the opportunity to buy Brookdale Senior Living at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Brookdale 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.
What does the future of Brookdale Senior Living look like?Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 75.16% over the next couple of years, the future seems bright for Brookdale Senior Living. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? BKD’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe BKD 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 an eye on BKD for a while, 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 is encouraging for BKD, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Brookdale Senior Living. You can find everything you need to know about Brookdale Senior Living in the latest infographic research report. If you are no longer interested in Brookdale Senior Living, you can use our free platform to see my list of over 50 other stocks with a high growth potential.