Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Brookdale Senior Living Inc’s (NYSE:BKD) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. Check out our latest analysis for Brookdale Senior Living
Was BKD’s recent earnings decline indicative of a tough track record?BKD is loss-making, with the most recent trailing twelve-month earnings of -US$902.30m (from 31 March 2018), which compared to last year has become more negative. However, the company’s loss seem to be contracting over the medium term, with the five-year earnings average of -US$249.19m. Each year, for the past five years BKD has seen an annual increase in operating expense growth, outpacing revenue growth of 11.06%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Eyeballing growth from a sector-level, the US healthcare industry has been growing, albeit, at a unexciting single-digit rate of 9.96% in the past year, and a substantial 10.53% over the past five. This means that whatever uplift the industry is benefiting from, Brookdale Senior Living has not been able to gain as much as its average peer.
Given that Brookdale Senior Living is loss-making, with operating expenses (opex) growing year-on-year at 7.50%, it may need to raise more cash over the next year. It currently has US$510.06m in cash and short-term investments, however, opex (SG&A and one-year R&D) reached US$582.71m in the latest twelve months. Although this is a relatively simplistic calculation, and Brookdale Senior Living may reduce its costs or open a new line of credit instead of issuing new equity shares, the outcome of this analysis still gives us an idea of the company’s timeline and when things will have to start changing, since its current operation is unsustainable.
What does this mean?
Though Brookdale Senior Living’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to envisage what will occur going forward, and when. The most insightful step is to assess company-specific issues Brookdale Senior Living may be facing and whether management guidance has regularly been met in the past. You should continue to research Brookdale Senior Living to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for BKD’s future growth? Take a look at our free research report of analyst consensus for BKD’s outlook.
- Financial Health: Is BKD’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.